Demand Management

Chapter 2 1. Annual Meeting: Stockholders may non show up up at annual meetings or be addd with luxuriant info to have effective oversight over officeholder management. In addition, the corporate charter is often tilted to provide incumbent managers with the advantage, if there is a contest at the annual meeting. Board of Directors: Directors are often chosen by the incumbent managers (rather than by stockholders), own few shares and lack the expertise/information to ask tough questions of incumbent managers. 2. (a) An increase in dividends: form quick debt riskier and reduce its mensurate. Bondholders can protect themselves by trammel dividend policy. (b) A leveraged buyout: If the existing debt is not refinanced at the new entertain rate, existing bondholders will find the value of their holdings are refuse after the LBO. Bondholders can protect themselves by inserting protective aims into their debt, allowing them to put the bonds back to the firm and receive face value. (c) Acquiring a risky business: If a risky business is acquired, existing bondholders may find themselves worse off since the underlying debt is in a flash riskier. Bondholders can protect themselves by restricting investment policy. 3. The incident that markets are volatile, by itself, does not imply that they are not efficient.

If the underlying value of the investments traded in the market is changing a lot from period to period, prices should be volatile. Even if the underlying value is not moving as much as prices are, the event that markets make mistakes (which is what the noise is) does not imply that the prices are not unbiased estimates of value. 4. The empirical evidence does not support the mental picture that all investors focus on short term results. In particular, the evidence that high growth stocks are able to direct high price-earnings multiples, and that stock prices go up, on average, on the annunciation of R&D and major investments can be viewed as consistent with a market where some... If you want to get a full essay, order it on our website: Orderessay

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