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13. In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price in the long run, or the stock's "intrinsic value." TRUE or FALSE 14. In order to maximize its shareholders' value, a firm's management must attempt to maximize the expected EPS TRUE or FALSE 15. There are many types of unethical business behavior. One example is where executives provide information that they know is incorrect to banks and to stockholders. It is illegal to provide such information to banks, but it is not illegal to provide it to stockholders because they are the owners of the firm, not outsiders. TRUE or FALSE 16. If a stock's intrinsic value is greater than its market price, then the stock is overvalued and should be sold. TRUE or FALSE 17. A hostile takeover is said to occur when another corporation, or group of investors, gains voting control over a firm and replaces the old managers. If the old managers were managing the firm inefficiently, then hostile Takeovers can improve the economy. However, hostile takeovers are controversial, and legislative actions have been taken to make them more difficult to undertake. TRUE or FALSE 18. If a lower level person in a firm does something illegal, like "cooking the books to understate costs and thereby increase profits above the correct profits because he or she was told to do so by superior, the lower level person cannot be prosecuted but the superior can be prosecuted. TRUE or FALSE 19. Ir a firm's board of directors wants to maximize value for its stockholders in general (as opposed to some specific stockholders). It should design an executive compensation system whose focus is on the firm's long- ferm value. TRUE or FALSE 20. Each stock's rate of return in a given year consists of a dividend yield (which might be zero) plus a capital gains yield (which could be positive, negative, or zero). Such returns are calculated for all the stocks in the S&P 500. A simple average of those returns (which gives equal weight to each company in the S&P 500) is then calculated. That average is called the return on the S&P Index," and it is often used as an indicator of the "return on the market." TRUE or FALSE 21. A publicly owned corporation is a company whose shares are held by the investing public, which may include other corporations as well as institutional investors. TRUE or FALSE

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