If Management Perceives the Current Market Equity Value of Their

question 50

Multiple Choice

If management perceives the current market equity value of their shares to be OVER valued,then management should:

• A)issue new shares later after stock prices have come down so as not to further increase the price dilution found when issuing shares.
• B)issue new shares now to take advantage of the market mispricing,but only if they believe the market is at least momentarily inefficient.
• C)wait to issue until prices are UNDER valued so that there option values increase more rapidly.However,they would only do this if they have the best interest of shareholders in mind.
• D)recommend that existing shareholders buy more shares at current market prices because they are so valuable.

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Definitions:

Collective Responsibility

Collective responsibility is the doctrine or principle that each member of a group shares responsibility for the actions or outcomes of the group as a whole, emphasizing mutual accountability.

Mediating Variables

Variables that explain the relationship between two other variables, usually serving as an intermediary or mechanism through which an effect occurs.

Heroic Individual Leaders

The concept that leaders are exceptional individuals, possessing unique traits that enable them to influence and direct others effectively, often single-handedly overcoming obstacles.

Dyadic Processes

Interactions and exchanges that occur between two individuals, often in a leadership or partnership context.