If management perceives the current market equity value of their shares to be OVER valued, then management should:
A) issue new shares later after stock prices have come down so as not to further increase the price dilution found when issuing shares.
B) issue new shares now to take advantage of the market mispricing, but only if they believe the market is at least momentarily inefficient.
C) wait to issue until prices are UNDER valued so that there option values increase more rapidly. However, they would only do this if they have the best interest of shareholders in mind.
D) recommend that existing shareholders buy more shares at current market prices because they are so valuable.
B
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Diffusion Research Company specializes in conducting market research for various firms
When it receives proposals for new research, its management will first estimate the cost of conducting the research and producing and delivering the final research report. The management then adds 30 percent to that cost estimate. This becomes the price estimate given to the potential research client. This suggests that Diffusion Research Company uses a _____ pricing objective. a. profit-oriented b. market share maximization c. status quo d. sales maximization
On December 31, 2011, salaries owed to employees total $2,350 and will be paid on January 4, 2012. The adjusting entry prepared on December 31, 2011, includes a:
A. debit to Salary Expense for $2350 B. debit to Salary Payable for $2,350 C. credit to Cash for $2,350 D. credit to Salary Expense for 2350