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d. Publicly owned companies have shares owned by investors who are
not associated with management, and public companies must register
with and report to a regulatory agency such as the SEC.
e. It is possible for a firm to go public and yet not raise any additional
new capital at the time.
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FIN 534 Week 1 Chapter 2 Solution
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Which of the following statements is CORRECT?
a. Typically, a firm’s DPS should exceed its EPS.
b. Typically, a firm’s EBIT should exceed its EBITDA.
c. If a firm is more profitable than average (e.g., Google), we would
normally expect to see its stock price exceed its book value per share.
d. If a firm is more profitable than most other firms, we would normally
expect to see its book value per share exceed its stock price, especially
after several years of high inflation.
e. The more depreciation a firm has in a given year, the higher its EPS,
other things held constant.