NYU Damodaran Applied Corporate Finance A Users Manual 3e 课后习题答案.pdfVIP

Chapter 2 1. Annual Meeting: Stockholders may not show up at annual meetings or be provided with enough information to have effective oversight over incumbent 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: Make existing debt riskier and reduce its value. Bondholders can protect themselves by constraining dividend policy. (b) A leveraged buyout: If the existing debt is not refinanced at the “new” interest rate, existing bondholders will find the value of their holdings are lower after the LBO. Bondholders can protect themselves by inserting protective puts 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 now riskier. Bondholders can protect themselves by restricting investment policy. 3. The fact 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 fact that markets make mistakes (which is what the noise is) does not imply that the prices are not unbiased estimates of value. Put another way, it takes more than mistakes made by markets to prove that markets are inefficient. 4. The empirical evidence does not support the notion that all investors focus on short term results. In particular, the evidence that high growth stocks are able to command high p