1. Question : (TCO D) Which of the following statements concerning common stock and the investment banking process is NOT CORRECT? (a) The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue. (b) If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market. (c) Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm.
Stock market can either make me more money or lose more money. It all depends on the risk I have and the business knowledge I have for a certain stock. The stock market is a test for me in knowing what stocks to buy or sell at a right time. I appreciate in a nice way of how the stock market procedures work, and looking at the yearly or monthly basis of their graphs. Furthermore, the stock market is one of the best ways to test the knowledge of using business
The ROE for Sepracor is 33.07%, which means that 33.07 cents of assets are created for each dollar that was originally invested. It measures how Sepracor is using its money. The higher the return on equity, the more funds available to be invested in improving business operations without having to invest more capital. Debt to asset ratio measures the company’s solvency, and the higher the ratio, the lower the borrowing capacity for the company. I would make an investment in the company’s 5% convertible bonds.
Explain the difference in the required return estimates from the Value Line to the WSJ price data. The company’s return on common stock using the constant growth model is 7.72% Expected dividend yield = .60/27= 2.22% Cap. Gains Yield=5.5% The expected returns decreased from 8.36%to 7.72% which indicates the company is not as risky because the higher the risk the higher the return. B. What is the relationship between dividend yield and capital gains yield over time under constant growth assumptions?
Stockholders may assume when reading the financial statements that they would be receiving a higher return each month or quarter when in reality that would not be the case especially if they are planning on switching to LIFO. It is unethical to make a huge financial decision based on only short term goals. The Sabarnes-Oxley act of two-thousand and twelve, contains 11 sections detailing rules and regulations for financial reporting. The SOX act section 404 requires that management of
Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities. This could be due to quick expansion of inventory with the intention of increasing sales. While this is currently considered a weakness and is concerning, a rise in the ratio should be seen by 2013 due to the increase of suggested sales. 3. I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year.
Look at your pricing policy and make changes appropriately. You should compare your own hire prices to those of your competitors, check can you afford a rise in your prices without losing custom? You can use the trading, profit & loss forecast to monitor your spending throughout the year. Keep an eye on your monthly expenses to ensure they do not creep up higher than what you are expecting, as this will affect your overall profit at the end of the year. Use the figures in both forecasts to make appropriate decisions to ensure the survival and success of your
Being able to track sales compared to the previous years’ numbers is a valuable tool in being able to track business. They use this information to forecast on where they think the business will be heading in the next week, month, or year. If the debt percent gets to high then they need to adjust the amount of liabilities that they have to bring that number down. Knowing the times interest earned ratio allows the managers to know at what percent the company is earning interest on its net income. Investors find this information lucrative because the more expendable cash a company has the more likely they are to pay out in dividends for the stock holders..
The think that I learn from this project, when there is economical problem the prices of stock fluctuate whether it goes up or down. This assignment taught me how to better understand the stock market and what we should expect when it falls or goes up. And what could be the risk when investing such a lower market. I learn that various industry have different trend and the way to develop those trend. I learn that the company who mislead their consumer could run to a higher risk.
What is the expected dividend yield and the expected capital gains yield? Explain the difference in the required return estimates from the value line to the WSJ price data? The expected return is 7.72% The expected dividend yield =2.22% and the capital gains yield is the growth rate of 5.50%. The required return estimates have decreased and the stock price has increased is because it is believed the company has less risk now than it did when the Value Line estimates were released. 3.