For initial public offerings of common stock, 2009 was a slow year, with over $13 billion raised by the process. Relatively few of the 41 firms involved paid cash dividends. Why do you think that most chose not to pay cash dividends?
Answer to relevant QuestionsMidnight Hour Inc., has declared a $5.10 per-share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. ...The owners’ equity accounts for Octagon International are shown here: Common stock ($1 par value) .......... $25,000 Capital surplus ................... 195,000 Retained earnings .............. 734,600 Total ...In the previous problem, suppose the company instead decides on a five-for-one stock split. The firm’s 80-cent per share cash dividend on the new (post-split) shares represents an increase of 10 percent over last year’s ...In the previous problem, assume the risk-free rate is only 5 percent. What is the risk-neutral value of the option now? What happens to the risk-neutral probabilities of a stock price increase and a stock price decrease? Fourer Corp. has a zero coupon bond that matures in five years with a face value of $90,000. The current value of the company’s assets is $74,000, and the standard deviation of its return on assets is 50 percent per year. ...
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