In world with no taxes or bankruptcy costs

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In a world with no taxes or bankruptcy costs, Alice and Bob are CEOs of di↵erent firms. Alice says "Our firms have identical assets. However, analysts expect my equity will pay 15% in coming years, but your equity will pay 10%. Therefore I must be a better manager than you are". This conclusion:

(a) Is definitely true

(b) Is likely false

(c) Is definitely false

Explain

Reference no: EM133305923

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