1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
artcher [175]
3 years ago
5

What are three techniques stockholders can use to motivate managers to maximize their stock’s long-run price? Should managers fo

cus directly on the stock’s actual market price or its intrinsic value, or are both important? Explain.
Business
1 answer:
Romashka [77]3 years ago
6 0

Answer:

Please see below.

Explanation:

a.

• Reasonable compensation package. Every stockholders would usually want a good return on their investments. One of the techniques that can be used by them is to offer good and reasonable compensation packages to the company's highly performing executives and managers. The aim is to spur them to act in the best interest of the stockholders and not themselves. This will also translate to better performance of the company.

• Firing of managers who don't perform well. If a company's stock is not performing well(does not appreciate), such would usually be tied to its board and managers. Stockholders are the owners of a company because their funds are being used to trade hence can threaten to replace or actually replace any manager who is not performing well. By so doing, the managers that are retained will be motivated to perform really well in order to retain their jobs hence translate to better company performance.

• Threat of hostile take over. Stockholders could also threaten a company's board of being taken over by a proven and well accomplished company , if their stock price does not improve overtime. When the managers or board realize that their job is being threatened, they will be motivated to act fast by ensuring that the company's stocks yield adequate return in the long run.

b.

What should be paramount to managers is how to ensure that their company's intrinsic stocks value(an estimate of the true value of a stock, that is premised on well calculated risk) are well maximized. The stockholders should also be carried along while this process is on going. By maximizing their stock's intrinsic value, such would bring about high value to the stocks, while as time goes on, the actual stock price will be much closer to the intrinsic value of the stocks.

You might be interested in
A decade after world war i ended, a significant event occurred that caused consumer sales resistance, corporate budget cutting a
natta225 [31]
The Great Depression
6 0
3 years ago
Harry Trading Company must choose its optimal capital structure. Currently, the firm has a 20 percent debt ratio and the firm ex
AnnyKZ [126]

Answer:

They should not make the change because the price of the stocks will decrease.

Explanation:

the current price of the stocks using the perpetuity formula = dividend / required rate of return

current price with current capital structure = $5.64 / 0.123 = $45.85

if the company changes its capital structure by increasing debt, the price of the stocks will be

$5.92 / 0.136 = $43.53

since the price of the stocks would actually decrease if the capital structure changes, the change should not be made. The stockholders' wealth is measured by the price of the stocks, and if the price of the stocks decreases, then the stockholders' wealth also decreases.

4 0
3 years ago
Companies create a division of labor among employees in order to: 0 a. allow each employee to perform one task at a high level.
sergejj [24]

Companies create a division of labor among employees in order to allow each employee to perform one task at a high level

<h3>What is division of labor?</h3>

It involves Sharing of duties or job among individuals or employee.

An employee is allowed to handle a particular task for efficiency.

Therefore, Companies create a division of labor among employees in order to allow each employee to perform one task at a high level

Learn more on labor below?

brainly.com/question/25803580

#SPJ1

3 0
2 years ago
The market interest rate related to a bond is also called the Group of answer choices stated interest rate effective interest ra
Naddika [18.5K]

Answer:

Effective Interest Rate

Explanation:

Effective Interest Rate

The market interest rate is the real return on the bonds, or any interest offering investment. It is otherwise known as the effective interest rate. Moreover, there is an inverse relationship between the market interest rate and the value of bonds that means an increase in the market interest rate will result in a decrease in the market values of bonds.

3 0
3 years ago
Which of the following is true of email?
Oliga [24]

Answer:D

Explanation:

7 0
2 years ago
Other questions:
  • On january​ 1, 2017​ hillop, inc. had total assets of​ $370,000. during the​ year, the company purchased new machinery worth​ $8
    12·1 answer
  • The phs regulations about financial conflict of interests require which party to disclose significant financial conflicts of int
    5·2 answers
  • Which of the following is FALSE? Group of answer choices Most of the maquiladora industry is located in the states of Mexico tha
    5·1 answer
  • The advanced machinery used for limestone quarrying in a particular region leads to noise pollution and affects the hearing abil
    9·1 answer
  • You produce T-shirts, and it costs $3 to make each shirt. If you choose a price of $5 for each shirt, then you will _____.
    14·1 answer
  • An example of a difficult work decision would be: a. Deciding to finish a task before taking a break b. Deciding to fill the pap
    5·1 answer
  • Brown and Lowery, Inc. reported $470 million in income before income taxes for 2018, its first year of operations. Tax depreciat
    8·1 answer
  • Ana is trying to finish an account analysis for a client, but she's missing data. She e-mails Claire in database administration
    10·1 answer
  • An entrepreneur purchased an existing bicycle shop that had between 13000
    10·1 answer
  • Question + answers in photo, please help!
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!