Question

Which of the following statements is CORRECT? a. In general, it is more in bondholders' interests than stockholders' interests for a firm to shift its investment focus away from safe, stable investments and into risky investments, especially those that primarily involve research and development. b. The managers of established, stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers. c. The efficiency of the U.S. economy would probably be increased if hostile takeovers were absolutely forbidden. d. Stockholders in general would be better off if managers never disclosed favorable events and therefore caused the price of the firm's stock to sell at a price below its intrinsic value.

Answer 1

b. The managers of established, stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers.

Step-by-step explanation:

The managers of established companies attempt to get their states legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers. They achieve this by lobbying state lawmakers.

Option A is incorrect because both bondholders and shareholders are not in support of risky investment because they will both suffer loss from any failed investment.

Option C is wrong, this is because hostile takeovers help to increase competitions in the market and it is also an avenue for a poorly managed firm to be taken over by more visionary and capable individuals and it actually helps in saving an already failing company thus helping in maintaining/improving the economy.

Option D is incorrect because on the contrary, knowledge of favourable events increases the selling price of a firms stock above its intrinsic value.