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In relation to information requirements for valuing shares, which of the following statements is correct?
A.Only information on the market values of tangible assets should be used in valuing shares
B.Shares are likely to be mispriced where managers and investors have different levels of information (information asymmetry)
C.Details of key personnel are not relevant to the market capitalisation of a listed company
D.Since companies do not release information that undermines their competitive advantage, most of the published information about a company is not relevant to placing a value on its sharesSIR COULD YOU EXPLAIN THIS….
Shares are likely to be mispriced where managers and investors have different levels of information.
This statement is correct because information asymmetry occurs when managers have more or better information about the company’s prospects and performance than investors.
This disparity can lead to shares being mispriced, as investors may not have access to all the relevant information needed to accurately value the shares.
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