Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259722615
Author: Richard A Brealey, Stewart C Myers, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 4, Problem 2QP

Market Value Added. Suppose the broad stock market falls 20% in a year and Home Depot’s stock price falls by 10%.

  1. a. Will the company’s market value added rise or fall?
  2. b. Should this change affect our assessment of the performance of Home Depot’s managers?
  3. c. Would you feel differently about Home Depot’s managers if the stock market were unchanged and Home Depot’s stock fell by 10%?
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