1. Which of the following statements is true regarding stock prices and intrinsic values?
a.) A stock’s intrinsic value is based on the fundamental cash flows and the company’s risk.
b.) The intrinsic value of a stock is based only on the perceived risk in the company.
2. Which of the following describe the reason(s) why maximization of intrinsic stock value benefits society? Check all that apply.
a.) Stock price maximization requires efficient, low-cost businesses.
b.) Successful companies can avoid raising external funds in the financial markets.
c.) Successful companies hire more employees.
d.) Most investors prefer companies that can rise prices beyond reasonable levels.