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:

Operant Conditioning

A learning process in which the strength of a behavior is modified by reinforcement or punishment.

Voluntary Behavior

Actions performed by an individual that are done by choice, with conscious control.

Cognitive Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, attitudes, and preferences through thinking and problem-solving.

Neurophysiological Learning

The process of forming and strengthening neural connections in the brain as a result of learning and experience.