One of the following decisions is not taken to increase the stock price: Select one: a. Maximize costs b. Attracting additional funds c. Maximize net income or profit d. Returning profits to owners over time
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- One position expressed in the financial literature is that firms set their dividends as a residual after using income to support new investments. Explain what a residual policy implies (assuming that all distributions are in the form of dividends), illustrating your answer with a table showing how different investment opportunities could lead to different dividend payout ratios.Choose the letter of the correct answer 2. When the cost model/method is used to account for an investment, which of the following would not result in an adjustment to the amount recorded in the investment account? A. The investee declares a regular dividend B. The investor sells some of the stock C. The investee declares a liquidating dividend D. The stock’s market value decreases to a point where is it below the investor’s costThe expected return on a stock is called the __ from the investor's perspective, and the __ from the company's perspective. A. required return; cost of equity B. required return; cost of capital C. excess return; cost of equity D. excess return; cost of capital
- The residual dividend approach is the best dividend policy to adopt if a firm’s management wants to maximize the current value per share of the existing stock. Do you agree or disagree with this statement? State and justify your conclusions.How does a fundamental analyst interpret the support level as the price range? Group of answer choices demand for a stock to decrease substantially. support level is not relevant supply of a stock to increase dramatically. demand for a stock to increase substantially.If the expected rate of return on a stock is less than its required rate of return, investors will desire to ________ the stock Choose answer rise sell buy decline There will also be a tendency for the stock's price to _________. rise sell buy decline
- Which of the following statements is most accurate in analyzing a stock? If the expected return exceeds itsrequired return__________________a. The stock should be sold.b. The stock is good to buy.c. The management is probably not trying to maximize the price per share.d. Dividends are not likely to be declarede. The stock is experiencing supernormal growthYou, in analyzing a stock, find that its expected return exceeds its required return. This suggests that you think a. the stock should be sold. b. the stock is a good buy. c. management is probably not trying to maximize the price per share. d. dividends are not likely to be declared. e. the stock is experiencing supernormal growth.Choose the correct. Which of the following is not included in the assumption on which Myron Gorden proposed a model on Stock valuation: A. Retained earning the only source of financing B. Finite Life of the firm C. Taxes do not exist D. Constant rate of return on firms investment.
- Which of the following statement(s) is(are) TRUE? (i) The valuation price of a stock primarily depends on expected future dividends to its shareholders and its required rate of return. (ii) An investor who intends to sell a stock after holding it for a short period will forgo all future dividends, thus will be willing to pay for a lower price for the stock compared to another investor who prefers to hold the share for a longer period. (iii) The valuation share price is positively related to the share's required rate of return.which of the following statements is true? Select one: Investors sell a stock when required return is less than expected return and buy a stock when required return above expected return None of the answers are correct Investors buy a stock when it is under-valued and sell it when it is over-valued Investors sell a stock when it is under-valued and buy it when it is over-valued.Discuss on the statement “Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long term profits.