When a Firm Is Searching for Attractive Opportunities, a Good

question 301

Multiple Choice

When a firm is searching for attractive opportunities, a good manager should keep in mind that ___________ strength is very important.

• A) financial
• B) production and flexibility
• C) marketing
• D) pricing
• E) all of these strengths are important

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Definitions:

Survivorship Bias

The analytical error of focusing only on entities that have "survived" a selection process, ignoring those that have failed.

Infrequently-Traded Assets

Assets that do not trade on a regular basis on the secondary market, making their valuation and liquidity different from frequently traded assets.

Liquidity Premiums

Additional returns investors demand for holding securities that are not easily convertible to cash without a loss in value.

Mispricing

The occurrence when the market price of an asset does not accurately reflect its intrinsic value, possibly due to information asymmetry, market inefficiency, or other factors.