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Homework answers / question archive / Copenhagen Business School FINANCE Corporate Quiz 10 Question1)You observe that a CEO of a well-known company is selling out of the company stock
Copenhagen Business School
FINANCE Corporate
Quiz 10
Question1)You observe that a CEO of a well-known company is selling out of the company stock. The stock was held in the CEO's private portfolio. This behaviour sends (without doubt) the following signal:
If you receive compensation in stocks you don’t want to be too heavily invested in one stock, but diversify, and it could also be that there is asymmetric information, but since it says without doubt the correct answer is none of the above.
Question 2
If some shareholders have a short investment horizon and others have a long investment horizon, what should the CEO of the company do?
He should just care about maximizing shareholder value. If he should maximize the value, it should
benefit both short term and long term.
Question 3
Which of the following constitutes a risk management failure?
Question 4
A company announces that they will hire a new CEO who is expected to increase the firm's value. The CEO will start next month. She will be compensated with stock options and the options will have a strike price equal to the stock price on the day before she starts. You are asked to evaluate whether this is a good compensation package. What will happen to the stock price:
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