Answer the questions below.... Question #1: According to the finance theory we have discussed so far in the course, what rule(s) should managers use to decide how to deploy capital? Does this line up...

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Answer the questions below....


Question #1: According to the finance theory we have discussed so far in the course, what rule(s) should managers use to decide how to deploy capital? Does this line up with the discussion in the article? Explain why or why not. What are some ways that shareholders can ensure that managerial decisions are made in their best interests?


Questions #2: Is it reasonable to conclude from reading the article that firms would achieve higher TSR by making acquisitions or stockpiling cash? Why or why not? What additional information would you need to properly assess the impact on shareholder wealth of the various capital deployment choices described in the article?




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Answered Same DayMay 27, 2021

Answer To: Answer the questions below.... Question #1: According to the finance theory we have discussed so far...

Riddhi answered on May 28 2021
141 Votes
Answer to Question 1 –
The rules for capital deployment are as follows –
1. Survival is the top pr
iority.
2. Purchase at low price and sell at high price
3. Do not invest where every invests
4. Financial engineering is usually outperformed by investment.
5. Organic investment should be prioritized.
The rule in the article is to be Careful, growth should be pursued, a chance should be given to all investments, High dividend is not a priority and Company that buy back do well.
The first rule of be careful and survival is the top priority are similar.
The third rule is not investing in all the investment whereas in the discussion of the article it says that all investment should be given a chance which is not in line.
There is no specific rule on dividend paying or company buying back shares are more beneficial for investors, but it builds in confidence in the investors on the objects of the company.
Not all rules...
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