voting‚ and they enjoy a first option to purchase new shares. The common stockholder is the last in line to receive payment but the stockholder’s potential participation is unlimited. Instead of getting a $1 dividend‚ the investor may someday receive many times that much in dividends and also capital appreciation in stock value. 7. Why might management use a poison pill strategy? A poison pill represents a rights offer made to existing shareholders of a company with the sole purpose of making
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income this year will be $3‚500‚000. If the company follows a residual dividend policy‚ what will be its total dividend payment? (a) $205‚000 (b) $500‚000 (c) $950‚000 (d) $2‚550‚000 (e) $3‚050‚000 Student Answer: Answer:(c) $3‚000‚000 $3‚500‚000 – $2‚550‚000=$950‚000 × 85% = $2‚550‚000. The firm has $3‚500‚000 of net income‚will be dividends. Instructor Explanation: Answer is: c Text: pp. 570-572 - Residual Dividends‚ Chapter 14 The amount of new investment which must be financed with
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is somewhat more predictable (more certain). The issuing company will generally make a real effort to try to avoid defaulting on the preferred stock dividend. Since the return to preferred stock is reasonably well defined and since the preferred stockholders precede the common stockholders (the preferred dividends are paid before the common dividends)‚ preferred stock is a popular type of security for executing mergers and acquisitions. From the point of view of an issuing corporation’s common stockholders
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December 31‚ 2007 included proceeds on the sale of businesses/assets‚ loss from continuing operations adjusted for non-cash items of income and expense‚ debt payments‚ restructuring payments‚ capital additions‚ working capital sources and needs‚ dividend payments and employee and retiree benefit plan payments/contributions. Net cash provided by continuing operations from operating activities was $351 million for the year ended December 31‚ 2007. The Company’s primary sources of cash from operating
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Content Approach I: “Dividend Discount Model” 3 (1) Dividend payout in 7 years 3 (2) Constant growth rate estimation 4 (3) Net earnings from same sector 11 (4) ROE for the companies in the same sample set 16 (5) Share price estimation by DDM 21 Approach II: “Valuation Multiple” 23 1) Price – earning ratio of each sector 23 2) Share price estimation by PE ratio 28 Reconciliation report 30 In this assignment‚ we are going to analyze 5 companies which are come from Banking
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just the basic stock that we’re used to trading. Companies sell common stock through public offerings‚ and it’s traded among investors on the secondary market. Those who hold the stock hope to earn dividends from their share of company profits. However‚ many profitable companies don’t pay dividends‚ and never have any intentions of doing so (i.e. Microsoft). The obvious risk with common stock is that the price may fall. Unlike some other investment vehicles‚ investors can not lose more than their
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Risk Factors Risks Relating to Honda’s Industry 1. Honda may be adversely affected by market conditions Honda conducts its operations in Japan and throughout the world‚ including North America‚ Europe and Asia. A sustained loss of consumer confidence in these markets‚ which may be caused by continued economic slowdown‚ recession‚ changes in consumer preferences‚ rising fuel prices‚ financial crisis or other factors could trigger a decline in demand for automobiles‚ motorcycles and power products
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Invite Manipulation? The cost method of accounting for investments often caused a lack of objectivity in reported income figures. With a large block of the investee’s voting shares‚ an investor could influence the amount and timing of the investee’s dividend distributions. Thus‚ when enjoying a good earnings year‚ an investor might influence the investee to
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SEAT NUMBER: ……….… ROOM: .………………. FAMILY NAME.………….....…………………………. This question paper must be returned. Candidates are not permitted to remove any part of it from the examination room. OTHER NAMES…………….…………………..…….. STUDENT NUMBER………….………..…………….. SESSION 2 EXAMINATIONS NOVEMBER 2012 Unit Code and Name: AFIN252‚ Applied Financial Analysis and Management Time Allowed: 3 hours plus 10 minutes reading time. Total Number of Questions: 50 Multiple Choice Questions plus 8 full response questions.
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Dividend Policy at FPL Group Inc. Because of FPL’s reluctance to increase its dividends and increased competition in the electric utility industry‚ Merrill Lynch’s utility analyst downgraded FPL Group Inc. Kate Stark‚ utility analyst at First Securities Corporation‚ wondered whether she should issue an updated report about stocks of FPL. We investigated the potential risks faced by FPL and its payout policies‚ and according to the results‚ we recommend the shareholders to hold FPL’s stocks.
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