If Someone Deliberately Understates Costs and Thereby Increases Profits, Then

question 62

True/False

If someone deliberately understates costs and thereby increases profits, then this can cause the price of the stock to rise above its intrinsic value. The stock price will probably fall in the future. Also, those who participated in the fraud can be prosecuted, and the firm itself can be penalized.

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Definitions:

Acknowledging

The act of recognizing or admitting the existence or truth of something.

Personal Rejection

The feeling of being dismissed or not accepted by another individual or group.

Behaviors

Actions or reactions of an individual or group in response to external or internal stimuli.

Transference

In psychotherapy, the process by which emotions and desires originally associated with one person are unconsciously shifted to another person.