Question

 13. In order to maximize its shareholders value, a firm's management must attempt to maximize the stock price

 in the long nun, or the stock's "intrinsic value."

 TRUE or FALSE

 14. In order to maximize its shareholders' value, a firm's management must attempt to maximize the expected

 EPS.

 TRUE or FALSE

 15. There are many types of unethical business behavior. One example is where executives provide information

 that they know is incorrect to banks and to stockholders. It is illegal to provide such information to barks.

 but it is not illegal to provide it to stockholders because they are the owners of the firm, not outsiders.

 TRUE or FALSE

 16. If a stock's intrinsic value is greater than its market price, then the stock is overvalued and should be sold.

 TRUE or FALSE

 17. A hostile takeover is said to occur when another corporation, or group of investors, going vetting control overo

 firm and replaces the old monagers. If the old managers were managing the firm inefficiently, then hostile

 takeovers can improve the economy. However, hostile takeovers are controversial, and legislative actions have

 been taken to make them more difficult to undertake.

 TRUE or FALSE

 18. If a lower level person in a firm does something illegal, like "cooking the books" to understate costs and

 thereby increase profits above the correct profits because he or she was told to do so by a superior, the

 lower level person can not be prosecuted but the superior can be prosecuted.

 TRUE or FALSE

 19. If a firm's board of directors wants to maximize value for its stockholders in general (as opposed to some

 specific stockholders), it should design an executive compensation system whose focus is on the firm's long-term value.

 TRUE or FALSE

 20. Each stock's rate of return in a given year consists of a dividend yield (which might be zero) plus a capital

 gains yield (which could be positive, negative, or zero). Such returns are calculated for all the stocks in the

 SAP 500. A simple average of those returns (which gives equal weight to each company in the SAP 500) is then

 calculated. That average is called "the return on the S&P Index," and it is often used as an indicator of the

 "return on the market.".

 TRUE or FALSE

 21. A publicly owned corporation is a company whose shares are held by the investing public, which may include

 other corporations as well as institutional investors.

 TRUE or FALSE

Answer 1

9-

13-	TRUE	Increase in Intrinsic value or in stock price means increase in the value of investment of investor
14-	FALSE	EPS is derived from net earning and profit maximization is not the objective of financial management
15-	FALSE	because correct information should be provided to all stakeholders of the company
16-	FALSE	it is undervalued and it should be purchased
17-	TRUE	yes hostile take over is subject to legal rules and regulations
18-	FALSE	because he has violated code of conduct of his/her duties
19-	TRUE	executive are the human asset of the company and a sound compensation plan will help them to retain which results in better management
20-	FALSE	it is calculated on the basis of market capitalization weight
21-	TRUE	when shares are issued to public in a public offering, that corporation is called public corporation