Which of the following statements is CORRECT? Well designed bond covenants are u
ID: 2633774 • Letter: W
Question
Which of the following statements is CORRECT?
Well designed bond covenants are useful for reducing agency conflicts between stockholders and managers.
The bid price in a hostile takeover is generally above the price before the takeover attempt is announced, because otherwise there would be no incentive for the stockholders to sell to the hostile bidder and the takeover attempt would probably fail.
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.
Takeovers are most likely to be attempted if the target firm's stock price is above its intrinsic value.
The efficiency of the U.S. economy would probably be increased if hostile takeovers were absolutely forbidden.
Well designed bond covenants are useful for reducing agency conflicts between stockholders and managers.
The bid price in a hostile takeover is generally above the price before the takeover attempt is announced, because otherwise there would be no incentive for the stockholders to sell to the hostile bidder and the takeover attempt would probably fail.
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.
Takeovers are most likely to be attempted if the target firm's stock price is above its intrinsic value.
The efficiency of the U.S. economy would probably be increased if hostile takeovers were absolutely forbidden.
Explanation / Answer
The bid price in a hostile takeover is generally above the price before the takeover attempt is announced, because otherwise there would be no incentive for the stockholders to sell to the hostile bidder and the takeover attempt would probably fail.
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