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GeKay stock is worth $100, or $80, or $60. Investors believe that each case is equally likely so that the current share price is the average, namely $80. Suppose Mr. Satanak, the company CEO, announces that he will sell most of his holdings of the stock to diversify (and investors believe his motivation). Diversifying is known to be worth 10% of the share price ---that is, the CEO would be willing to receive up to 10% less than the shares are worth to achieve the benefits of diversification. a.If investors believe that Mr. Satanak knows the true value of the stock, how will the share price change (be precise here)if he tries to sell? (Assume that any attempt to sell is immediately observable by investors).b. If he actually goes ahead and sells (for the above reason 16a.), what must be the true share price? Explain briefly but clearly and concisely using complete sentences.
how to calculate cost of equity
Explain what caused "the long boom" in the U.S. and world economy from the early 1980s to its peak in 2006. Make sure to mention, with a few key facts in each case, the role playe
You have ten million dollars to allocate across two projects, code named 'Wombat' and 'Marmot.' Both projects are somewhat scalable, in that you could potentially invest as much (u
differentiate between pricing efficiency and allocative efficiency
Corporate restructuring Corporate restructuring entails any fundamental change in a company's business or financial structure, developed to raise the company's value to shareho
Some aggregate figures concerning the available data are shown in Table 1. The sizes of both the assortment groups and the product groups vary greatly across the groups. In Season
Jackson Corporation prepared the following book income statement for its year ended December 31, 2011: Sales
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Question: (a) Describe the essential characteristics of money. (b) Keynes identified three motives for holding balances of money. (i) What are these three motives?
What is the basic goal of a business? The main financial goal of the business firm is to make the most of the wealth of the firm's owners. Wealth, in turn refers to value good
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