Which of the Following Statements Is CORRECT

question 13

Multiple Choice

Which of the following statements is CORRECT?

• A) Hostile takeovers are most likely to occur when a firm's stock is selling below its intrinsic value as a result of poor management.
• B) The efficiency of the U.S. economy would probably be increased if hostile takeovers were absolutely forbidden.
• C) Hostile takeovers are most likely to occur when a firm's stock sells at a price above its intrinsic value because its management has been issuing overly optimistic statements about its likely future performance.
• D) In general, it is more in bondholders' interests than stockholders' interests for a firm to shift its investment focus away from safe, stable investments and into risky investments, especially those that primarily involve research and development.
• E) 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.

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Definitions:

Price of Resource

The cost associated with acquiring a resource that is necessary for production.

Demand for Automobiles

The consumer's desire and willingness to purchase cars, influenced by factors such as income levels, fuel prices, and technological advancements.

Automobile Workers

Individuals employed in the automotive industry, involved in the design, production, or assembly of automobiles.

Price

The economic worth conjectured, obligatory, or handed over as a consideration for something.