If management perceives the current market equity value of their shares to be OVER valued, then management should:
A) issue new shares later after stock prices have come down so as not to further increase the price dilution found when issuing shares.
B) issue new shares now to take advantage of the market mispricing, but only if they believe the market is at least momentarily inefficient.
C) wait to issue until prices are UNDER valued so that there option values increase more rapidly. However, they would only do this if they have the best interest of shareholders in mind.
D) recommend that existing shareholders buy more shares at current market prices because they are so valuable.
Question 2
Which of the following statements about ocean marine insurance is true?
A) The coverage is narrow and excludes perils of the sea.
B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship.
C) Protection and indemnity (P&I) insurance covers the shipper of goods for cargo losses.
D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.
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