Which of the following assumptions of the market for corporate takeovers can be criticised for being unrealistic in practice?

Question

Quizplus · Accepted Answer

The assumption that management knows the exact marginal cost and benefit involved in producing the optimum amount of information required to minimise the firm's cost of capital can be criticised for being unrealistic in practice. In reality, it can be difficult for management to accurately determine the marginal cost and benefit involved in producing more or less information, and there may be a trade-off between the cost of producing information and the benefits gained from it. The other assumptions (A, B, and D) are generally considered to be realistic in the market for corporate takeovers.

Which of the Following Assumptions of the Market for Corporate