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Good Decisions Can Reveal Unfavourable Information,and Bad Decisions Can Reveal

Question 10

Multiple Choice

Good decisions can reveal unfavourable information,and bad decisions can reveal favourable information.This means that:


A) share price reactions are always good indicators of whether a decision has a positive or a negative effect on a firm's intrinsic value.
B) managers who are concerned about the current or short-term share prices of their firms may bias their decisions in ways that reduce the intrinsic values of their firms.
C) though the weight that managers place on the potentially conflicting incentives is determined by the manager's compensation,it will have a neutral impact on the intrinsic value.
D) the ability to attract customers and other outside stakeholders are related to outsiders' perceptions of the firm's value and not on the intrinsic value of the firm.

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