1. An increase in the share price may be the result of the information problem when... a. markets...

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Finance

1. An increase in the share price may be the result of theinformation problem when...
a.
markets become too focused on short term results.
b.
actual accounting information exceeds the market'sexpectations.
d.
there is a large influence of insider trading.
2. The value of the firm is best measured by...
a.
the present value of expected earnings discounted back at a ratethe reflects both the riskiness of the firms projects and thefinancing mix used to fund those projects.
b.
the future value of expected earnings discounted back at a ratethat reflects both the riskiness of the firms projects andfinancing mix used to fund those projects.
c.
the present value of expected cash flows discounted back at arate the reflects both the riskiness of the firms projects and thefinancing mix used to fund those projects.
d.
3. Which of the following is not a potential problem associatedwith the formation of industrial groups in Japan and Germany?
a.
Conflicts of interest between firms.
c.
Increased risk taking.
d.
Contagion effects within the group.

Answer & Explanation Solved by verified expert

4.4 Ratings (810 Votes)

1 D Information problem is the problem of asymmetric information some parties have access to better information than others One consequence of this is insider trading when insiders with access to better prior information about a company buy the stock to make gains See Answer

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1. An increase in the share price may be the result of theinformation problem when...a.markets become too focused on short term results.b.actual accounting information exceeds the market'sexpectations.d.there is a large influence of insider trading.2. The value of the firm is best measured by...a.the present value of expected earnings discounted back at a ratethe reflects both the riskiness of the firms projects and thefinancing mix used to fund those projects.b.the future value of expected earnings discounted back at a ratethat reflects both the riskiness of the firms projects andfinancing mix used to fund those projects.c.the present value of expected cash flows discounted back at arate the reflects both the riskiness of the firms projects and thefinancing mix used to fund those projects.d.3. Which of the following is not a potential problem associatedwith the formation of industrial groups in Japan and Germany?a.Conflicts of interest between firms.c.Increased risk taking.d.Contagion effects within the group.

	a.	markets become too focused on short term results.
	b.	actual accounting information exceeds the market'sexpectations.

	d.	there is a large influence of insider trading.

	a.	the present value of expected earnings discounted back at a ratethe reflects both the riskiness of the firms projects and thefinancing mix used to fund those projects.
	b.	the future value of expected earnings discounted back at a ratethat reflects both the riskiness of the firms projects andfinancing mix used to fund those projects.
	c.	the present value of expected cash flows discounted back at arate the reflects both the riskiness of the firms projects and thefinancing mix used to fund those projects.
	d.

	a.	Conflicts of interest between firms.
	c.	Increased risk taking.
	d.	Contagion effects within the group.