Reference no: EM131835377

1. Which of the following statements is false?

a) In the event of a bankruptcy, bondholders stand first in line to receive any cash they are owed.

b) The value of a stock depends on the size, timing, and risk of its dividends.

c) Shareholders are responsible for repaying the firm’s debt.

d) Ethics and stock price maximization are generally consistent with each other.

e) Bankruptcies are good for bondholders because they get their money back faster through liquidation.

2. Which of the following is true concerning intrinsic value and price?

A) Intrinsic value depends on the size, timing, and risk of the expected cash flows.

B) The intrinsic value calculation produces the observed stock price.

C) The intrinsic value of a financial asset would not change even if its discount rate were to change.

D) Because the intrinsic values of all financial assets are the same, the intrinsic value of stocks equals the value of bonds.

E) More than one of the answers is correct.