AB Industries Is an All-Equity fiRm That Has $10 Per

question 44

Multiple Choice

AB Industries is an all-equity firm that has $10 per share in cash and a book value per share of $12. At which one of the following market prices would you know with absolute certainty that the stock
Was mispriced?

• A) $9
• B) $10
• C) $11
• D) $12
• E) $13

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Definitions:

BSC Performance Perspectives

A strategic planning and management system that organizations use to communicate what they are trying to accomplish, align the day-to-day work, and prioritize projects, products, and services.

Lagging Indicator

A metric that shows the performance of an economy, industry, or company after the fact and confirms trends rather than predicting them.

Cognitive Bias

Systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.

Balanced Scorecard

A strategic planning and management system that organizations use to communicate what they aim to accomplish, align day-to-day work with strategy, prioritize projects, and measure and monitor progress.