DreamWorks Animation, led by billionaire Microsoft founder Paul Allen, went public in a recent year with its
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DreamWorks Animation, led by billionaire Microsoft founder Paul Allen, went public in a recent year with its class A common stock at $28 per share, raising $650 million. By the end of the first day, it was up 27 percent to $38 per share, giving the company a value of almost $1 billion. This initial enthusiasm did not last. By the end of 2007, the price was only around $25 per share.15 As a growing company that has produced such animated hits as Shrek and Shrek II, DreamWorks could have borrowed significant funds by issuing long-term debt. What are some advantages of issuing common stock as opposed to bonds? What are some disadvantages?
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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An advantage of issuing common stock is that it improves the companys debt to equity ...View the full answer
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