Financial Management Essay

Question 1-3Suppose three h one(a)st individuals gave you their estimates of Stock Xs intrinsic value. One is your current roommate, the second is a headmaster security analyst with an excellent reputation on Wall Street, and the third is Company Xs CFO. If the three estimates differed, in which one would you have the most confidence? Why?Question 1-7Should stockholder wealth maximization be thought of as a long-term or short-term goal? For example, if one action increases a firms stock price from a current level of $20 to $25 in 6 months and then to $30 in 5 years but another action keeps the stock at $20 for several years but then increases it to $40 in 5 years, which action would be better? Think of some specific corporate actions that have these general tendencies.Question 1-9The president of Southern Semiconductor peck (SSC) made this statement in the companys annual report SSCs primary goal is to increase the value of our common stockholders equity. Later in the report, the f ollowing announcements were made a. The company contributed $1.5 million to the symphony orchestra in Birmingham, Alabama, its headquarters city. b. The company is spending $500 million to open a new coif and expand operations in China.No profits will be produced by the Chinese operation for 4 years, so earnings will be depressed during this period versus what they would have been had the decision been made not to expand in China. c. The company holds about half of its assets in the form in U.S. treasury bonds, and it keeps these funds available for use in emergencies. In the future, though, SSC plans to shift its emergency funds from Treasury bonds to common stocks.