Question

Vision Tech’s stock price is currently trading at $17 per share. The consensus among analysts is that the intrinsic value of Vision Tech’s stock is $27 per share. Is Vision Tech more or less likely to receive a hostile takeover bid?a. Less likely b. More likely

Answer 1

Answer:

b. More likely

Explanation:

Vision Tech's stock is currently being undertraded and investors will see this as an opportunity to take over the company at a cheaper cost ($17 per share) and make a profit at the higher intrinsic value ($27 per share).

Gaining $10 per share on Vision Tech is a very high return on prospective investor's funds. So it is more likely that a hostile takeover bid will be received by Vision Tech.