Question: Differentiate the following terms/concepts (5 marks each - 20 MARKS) a. Clienteles and catering b. Dividend payment and home-made dividend c. Investor sentiment and irrationality

Differentiate the following terms/concepts (5 marks each - 20 MARKS) a.

Clienteles and catering b. Dividend payment and home-made dividend c. Investor sentiment

Differentiate the following terms/concepts (5 marks each - 20 MARKS) a. Clienteles and catering b. Dividend payment and home-made dividend c. Investor sentiment and irrationality d. Synergy and valuation consequences of a merger Differentiate the following terms/concepts (5 marks each - 20 MARKS) a. Payback and NPV b. Holding in-the-money options too long and engaging in frequent acquisitions c. Random treatment and self-selection treatment in the Camerer and Lovallo experiment d. Risk aversion and overconfidence in debt issuance You are a divisional manager. Currently you are a member of a committee that is considering two product investments proposed by two other divisional managers, Gustav and Hennie. While walking over to the presentation, Hennie seems rather arrogant. He mentions that he plays golf with the CEO, is a key player in the firm, and that you could really learn a lot from him. In thinking over the projects after the presentations, you find that you are really leaning toward Hennie's proposal even though the projects are quite similar in terms of estimated cash flows and risks. How can you explain this? (10 MARKS)

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