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All things equal, managerial risk aversion will have the following effect:   Question  options:   a)  CEOs will pass on NPV < 0 projects, which is an indirect agency cost   b)  Less diversified executives will place a lower value on riskier forms of compensation   c)  CEOs will prefer debt over equity financing for new projects   d)  CEOs will be less willing to accept underpricing at an initial public offering

All things equal, managerial risk aversion will have the following effect:   Question  options:   a)  CEOs will pass on NPV < 0 projects, which is an indirect agency cost   b)  Less diversified executives will place a lower value on riskier forms of compensation   c)  CEOs will prefer debt over equity financing for new projects   d)  CEOs will be less willing to accept underpricing at an initial public offering

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter10: Forecasting Financial Statement
Section: Chapter Questions
Problem 2QE: The chapter encourages analysts to develop forecasts that are realistic, objective, and unbiased....
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Question

All things equal, managerial risk aversion will have the following effect:

 

Question  options:

 

a) 

CEOs will pass on NPV < 0 projects, which is an indirect agency cost
 

b) 

Less diversified executives will place a lower value on riskier forms of compensation
 

c) 

CEOs will prefer debt over equity financing for new projects
 

d) 

CEOs will be less willing to accept underpricing at an initial public offering
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