Which of the Following Statements Is CORRECT

question 2

Multiple Choice

Which of the following statements is CORRECT?

• A) Hostile takeovers are most likely to occur when a firm's stock is selling below its intrinsic value as a result of poor management.
• B) The efficiency of the U.S.economy would probably be increased if hostile takeovers were absolutely forbidden.
• C) The managers of established,stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers.
• D) In general,it is more in bondholders' interests than stockholders' interests for a firm to shift its investment focus away from safe,stable investments and into risky investments,especially those that primarily involve research and development.
• E) 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.

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Definitions:

Land

In addition to the part of the earth’s surface not covered by water, this term refers to any and all natural resources (“free gifts of nature”) that are used to produce goods and services. Thus, it includes the oceans, sunshine, coal deposits, forests, the electromagnetic spectrum, and fisheries. Note that land is one of the four economic resources.

User Costs

Expenses incurred by consumers for the use of a good, service, or asset, including maintenance, repair, and operational costs.

Total Cost Line

A graphical representation showing the total cost of producing varying quantities of output.

Extraction Cost Line

A theoretical line representing the costs associated with extracting natural resources, considering factors like accessibility and resource depletion.