Question: Question 1 Briefly explailn how a misalignment of incentives between stakeholders and resource allocators (managers, directors, etc) in each of the following situations can destroy

Question 1 Briefly explailn how a misalignment of incentives between stakeholders and resource allocators (managers, directors, etc) in each of the following situations can destroy firm value: a) A manager is choosing how to allocate a limited capital budget b) A manager is choosing how to finance a new project (with debt or equity) c) Directors are assessing the prudence of making a large, one-time dividend payment d) Directors are deciding how to respond to a hostile bid to takeover the company Question 2 Activist investors can be both good and bad for a corporation. Briefly identify two (hypothetical) situations: one where the action of activist investors improves corporate outcomes, and another where their actions lead to worse outcomes for the firm.

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