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Write 2 page paper in which you respond to the question below and provide true/ false...

Write 2 page paper in which you respond to the question below and provide true/ false replies for all questions (with supporting rationale) and additional requested information, with references.

1d. True/ False - The liquidation value of a company's shares always places a floor under its stock price

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Answer #1

1 (d): FALSE.

Explanation: This is false because liquidation decision is in the hands of controlling shareholders. In case if the ownership of a company is widely disbursed then the liquidation decision is in the hands of the company’s management. If the company’s stock price is unusually low then the management will mostly be encouraged to take the company private through a management buyout.

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