Two Firms, Although They Operate in Different Industries, Have the Same

question 87

True/False

Two firms, although they operate in different industries, have the same expected earnings per share and the same standard deviation of expected EPS.Thus, the two firms must have the same business risk.

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Definitions:

Contract

A legally binding agreement between two or more parties that outlines obligations and rights.

Principal

In a legal context, the principal is the party who grants authority to an agent to act on their behalf in legal or financial matters.

Apparent Authority

A situation where someone appears to have the power to act on behalf of another (such as an employer), even if they do not have actual authority.

Ratify

To formally approve or confirm an agreement or act, making it officially valid.