Which of the following statements is most correct? a. If a company has two classes of common
Question:
Which of the following statements is most correct?
a. If a company has two classes of common stock, Class A and Class B, the shares may pay different dividends, but the two classes must have equal voting rights.
b. An initial public offering occurs whenever a company buys back its shares on the open market.
C. The right of first refusal is a provision in the corporate charter that grants common stockholders the right to purchase (on a pro rata basis) new issues of common stock.
d. Statements a and b are correct.
my. Statements a and c are correct.
Which of the following statements is most correct?
a. The constant growth model takes into account the capital gains realized from a stock.
b. It is appropriate to use the constant growth model to estimate the value of the stock even if the growth rate never becomes constant.
C. Two companies with the same dividend and growth rate must also have the same stock price.
d. Statements a and c are correct.
e. All of the statements above are correct.
A stock's dividend is expected to grow at a constant rate of 5 percent annually. Which of the following statements is most correct?
a. The expected return on the stock is 5 percent per year.
b. The stock's dividend yield is 5 percent.
C. The stock price one year from now is expected to be 5 percent higher.
d. Statements a and c are correct.
e. All of the statements above are correct.
Which of the following statements is most correct?
a. One of the advantages to the company associated with financing using preferred stock instead of common stock is that control of the company is not diluted.
b. Preferred stocks provide more stable and reliable income to investors than common stocks.
C. One of the advantages to the company of financing with preferred stock is that 70 percent of the dividends paid are tax deductible.
d. Statements a and c are correct.
e. Statements a and b are correct.
NOPREM Inc. is a firm whose shareholders do not have preemptive rights. The firm currently has 1,000 shares outstanding; The price is $100 per share. The company plans to issue an additional 1,000 shares at $90.00 per share. Since the shares will be offered to the general public, what amount per share will the former shareholders lose if they are excluded from purchasing new shares?
Suppose you plan to buy a share of XYZ today and hold it for 2 years. Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of $9.25 at the end of Year 2. Additionally, you expect to sell the stock for $150 at the end of Year 2. If your expected rate of return is 16 percent cent, how much should you be willing to pay today for this stock?
One common stock just paid a dividend of $2.00. If the expected long-term growth rate for this stock is 15 percent and if investors require a rate of return of 19 percent, what is the price of the stock?
Albright Motors is expected to pay a year-end dividend of $3.00 per share (D1 = $3.00). The stock is currently selling for $30 per share. The stock's required (and expected) rate of return is 16 percent. If the dividend is expected to grow at a constant rate, g, what is g?
One common share just paid a dividend of $3.00. If the expected long-term growth rate for this stock is 5 percent and if investors require a rate of return of 11 percent, what is the price of the stock?
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom