这道题老师讲解的是subsidiary是分散化，stand-alone entity是集中化这里没有明白

问题如下：

Baker mentions that he has heard that Wadgett Manufacturing Inc. projects rapid growth of what it calls “smart mirrors.” Baker states that Wadgett’s stock price had been decreasing recently and that he was not certain of an appropriate valuation for Wadgett. The analysts make the following statements:

Covey: The decline in price was the result of a recent failed acquisition of Wadgett; Wadgett’s price is moving back to an appropriate value as it no longer appears to be a takeover target.

Paschel: We could compare the value to that of the value of a subsidiary of a large technology conglomerate that also works on “smart mirrors.” However, the value of a subsidiary tends to be higher than if it were a stand-alone entity.

Baker: Pairs trading analysis would help determine whether Wadgett’s market price seemed to be below its intrinsic value

Who makes the most accurate statement in regard to Wadgett’s current valuation?

选项：

A.

Baker

B.

Paschel

C.

Covey

解释：

Covey’s statement is based on the idea that a firm’s stock price increases if it is the target of an acquisition (i.e., a control premium). Consequently, when the acquisition

failed with no apparent future threat of a takeover, the stock price decreases as the control premium vanishes.

B is incorrect. The subsidiary of a conglomerate generally has a value that is below its stand-alone value due to a conglomerate discount.

A is incorrect. Pairs trading is a relative value strategy that does not consider the actual intrinsic value of a given firm.