Suppose the broad stock market falls 20% in a year and Home Depot’s stock price falls...
Suppose the broad stock market falls 20% in a year and Home
Depot’s stock price falls by 10%.
| Price per share | Shares (million) | BV (million) |
| 114.75 | 1,307 | 9,322 |
a. Will the company’s market value added rise or
fall?
-
Rise
-
Fall
b. Should this change affect our assessment of the performance of Home Depot’s managers?
-
Yes
-
No
c. Would you feel differently about Home Depot’s managers if the stock market were unchanged and Home Depot’s stock fell by 10%?
-
Yes
-
No
Homework Answers
a.
fall as market price has fallen
b.
No, because broad equity market has performed even worse
c.
Yes, because overall market is stable
Add Answer to:
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