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Explain the principal problem involved in using a dividend valuation model to value companies that are of very large and mature.
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- How would each of the following changes tend to affect the average dividend payout ratios for corporations, other things held constant? Explain your answers. a.An increase in the personal income tax rate that is applied to dividends. b.A rise in interest rates. c.A decline in corporate investment opportunities. d.Permission for corporations to deduct dividends for tax purposes as they now can do with interest chargesCritically evaluate the view that the large movements in prices for Unity Software shares in the first six months of trading undermine the relevance of the dividend valuation model and the concept of market efficiency. First trading Day = USD $68.35 One month = USD $89.30 3 months = USD $157.77 6 months = USD $101.67Discuss the limitations of the dividend share valuation model for well established firms which have been listed on a stock exchange for many years.
- In the context of Initial Public Offerings (IPO), what is the main drawback of the book-building process? A. The fact that it may lead to overpricing of the company's shares B. The fact that the share allocation process is not transparent and may lead to quid-pro-quo and other forms of collusion between institutional investors and underwriters C. The fact that it may fail to attract institutional investors, thus leaving the company with few or no institutional analysts to issue recommendations on the company's shares D. The fact that the IPO may fail due to lack of venture capitalists backingBased on the learnings from your project, what are the limitations of Capital asset pricing model (CAPM) when used to pick stocks?Identify the term being referred to: A process wherein new shares are offered to existing shareholders based on their current shareholdings.
- In order to benefit from diversification, the returns on assets in a portfolio must: a. Not be perfectly positively correlated b. Have the same idiosyncratic risks c. Be perfectly positively correlated d. Be perfectly negatively correlatedDividend yield is defined as Multiple Choice ___ the last four quarters of dividend income expressed as a percentage of the par value of the stock. ___ the last four quarters of dividend income expressed as a percentage of the current stock price. ___ the last dividend paid expressed as a percentage of the current stock price. ___ the next dividend to be paid expressed as a percentage of the current stock price.Explain the reasons why non-investment management arrangements (franchising, management contracts) are becoming increasingly popular in multinational hotel operation.
- Market efficiency primarily concerned with how well the financial market reflects all the available financial information in the prices of the shares of listed companies. * True or False?Provide a bcg matrix of magnum ice cream with its competitorsThere is no difference on an economic basis between a stock dividend and a stock split.