Question : [21].Globalization of business has been facilitated by improvements in information : 1416300

 

 

^[21].Globalization of business has been facilitated by improvements in information technology.

 

a.True

b.False

 

^[22].As a result of the Enron scandal and other recent scandals, there has been a strong push to improve business ethics.

 

a.True

b.False

 

^[23].There are many types of unethical business behavior.  One example is where executives provide information that they know is incorrect to banks and to stockholders.  It is illegal to provide such information to banks, but it is not illegal to provide it to stockholders because they are the owners of the firm, not outsiders.

 

a.True

b.False

 

^[24].A stock's market price would equal its intrinsic value if all investors had all the information that is available about the stock.  In this case the stock's market price would equal its intrinsic value.

 

a.True

b.False

 

^[25].If a stock's market price is above its intrinsic value, then the stock can be thought of as being undervalued, and it would be a good buy.

 

a.True

b.False

 

^[26].If a stock's intrinsic value is greater than its market price, then the stock is overvalued and should be sold.

 

a.True

b.False

 

^[27].For a stock to be in equilibrium as the book defines it, its market price should exceed its intrinsic value.

 

a.True

b.False

 

^[28].The term "marginal investor" means an investor who is active in the market and would tend to buy a stock if its price fell and sell it if it rose, barring any new information coming out about the stock.  It is the “marginal investor” who determines the actual stock price.

 

a.True

b.False

 

^[29].If a lower level person in a firm does something illegal, like "cooking the books" to understate costs and thereby increase profits above the correct profits because he or she was told to do so by a superior, the lower level person cannot be prosecuted but the superior can be prosecuted.

 

a.True

b.False

 

^[30].If someone deliberately understates costs and thereby increases profits, this can cause the price of the stock to rise above its intrinsic value.  The stock price will probably fall in the future.  Also, those who participated in the fraud can be prosecuted, and the firm itself can be penalized.

 

a.True

b.False