Question
UTE's stock is worth either 20 per share, 15, 10. Investors believe each case is equally likely. The current share price is equal to the
UTE's stock is worth either 20 per share, 15, 10. Investors believe each case is equally likely. The current share price is equal to the average value of $15. suppose ute's CEO, announces he will sell most of his holdings of the stock to diversity at current market price 15. the ceo is willing to accept a 10% less than stock true value to achieve benefits to diversification.
What is the stock price after the announcement?
$20
$15
$12.5
$10
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Business Analysis And Valuation Using Financial Statements Text And Cases
Authors: Krishna G. Palepu, Paul M. Healy, Victor Lewis Bernard, W.Gordon Filby
2nd Edition
0324015658, 9780324015652
