Which of the Following Statements Regarding Efficiency Gains Is FALSE

question 9

Multiple Choice

Which of the following statements regarding efficiency gains is FALSE?

• A)Takeovers relying on the improvement of target management are difficult to complete,and post-takeover resistance to change can be great.Thus,not all inefficiently run organizations are necessarily more efficient following a takeover.
• B)Although identifying poorly performing corporations is relatively easy,fixing them is another matter entirely.
• C)A justification that acquirers cite for paying a premium for a target is efficiency gains,which are often achieved through an elimination of duplication.
• D)A chief executive of an inefficiently run corporation can be ousted by current shareholders voting to replace the board of directors,and in fact a large number of ineffective managers are replaced in this way.

Recognize methods and theories inconsistent with EMH and fundamental analysis in stock picking.

Explain the role of insurance companies in risk management.

Understand speculative bubbles and market irrationality.

Understand risk aversion and its implications for investment decisions.

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Definitions:

GDP

GDP represents the sum total of all monetary values of goods and services produced inside a nation's boundaries over a given time frame.

Trillion

A numerical value representing one thousand billion, or 10^12 in the United States and other countries using short scale numbering.

Total Savings

The aggregate amount saved by individuals, businesses, and the government, often measured over a specific time period.

Capital Formation

The process of building up the stock of physical and financial assets in an economy, often through investment in productive assets.