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Corporate Finance

In: Business and Management

Submitted By mvrobertson77
Words 355
Pages 2
Maria Robertson
Corporate Finance
08/12/2015
Chapter 1
1) Intrinsic value refers to the value of a stock and currency or product determined through fundamental analysis based on accurate risk and return data without reference to its market value. It is also frequently called fundamental value. Company’s current stock price is based on perceived but possibly incorrect information as seen by the marginal investor, which is the actual market value.
The stock’s true long value is more closely related to its intrinsic value.
2) A stock is in equilibrium when the stock’ s actual market price is equal to its intrinsic value.
A stock may not be in equilibrium when the marginal investor has perceived and incorrect information when estimating the stock value.
3) The Company’s CFO because if he has lied about the company’s intrinsic value can go to jail as they certify to the SEC that reports released to the stockholders are accurate.
4) Equal to its intrinsic value. No because as stocks holders or CEO ready to retire would be better to the stock price to be over the intrinsic value because they will receive more dividends or bonuses. However the intrinsic value tend to merge with the stock price in the long run.
5) A Fixed dollar amount. It should be measured in the growth in the long run. In the growth rate by profits would be easier. In the stocks intrinsic value would be better because that way managers will avoid to inflate stocks value by overstating profits.
6)Propietorships, Partnerships and Corporations
Advantages of Proprietorships and Corporations * Ease of formation * Subject to few regulations * No corporate income taxes.

Disadvantages: * Difficult to raise capital * Unlimited liability * Limited Life * Often set up through LLC and LLP
Corporations Advantages * Unlimited Life. * Easy transfer ownership…...

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