Which of the Following Statements Is CORRECT

question 38

Multiple Choice

Which of the following statements is CORRECT?

• A) Well-designed bond covenants are useful for reducing potential conflicts between stockholders and managers.
• B) The bid price in a hostile takeover is generally above the price before the takeover attempt is announced,because otherwise there would be no incentive for the stockholders to sell to the hostile bidder and the takeover attempt would probably fail.
• C) Stockholders in general would be better off if managers never disclosed favorable events and therefore caused the price of the firm's stock to sell at a price below its intrinsic value.
• D) Takeovers are most likely to be attempted if the target firm's stock price is above its intrinsic value.
• E) The efficiency of the U.S.economy would probably be increased if hostile takeovers were absolutely forbidden.

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Definitions:

Strategy

A plan of action designed to achieve a long-term or overall aim.

Effectuating Approach

A strategic framework used in entrepreneurship that focuses on using available resources and means to achieve new goals, rather than setting goals first and then seeking resources.

Entrepreneur

An individual who creates, launches, and manages a new business venture, often taking on significant financial risks.

Pattern Recognition

The ability to identify and understand regularities, repetitions, or trends in data, situations, or physical objects.