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1, Whats the difference is between common and preferred stock. If you were an investor, which type of stock would
you prefer? why?
2. According to the information provided by S&P, share buybacks totaled $198.7 billion in Q1 2020, but then the process slowed down. Among the companies, there were Apple, T-Mobile, Alphabet, and Microsoft. In your opinion, what are
the reasons companies buy their shares back? Does the COVID-19 pandemic influence their decision?
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- According to a company press release, on January 5, 2012, Hansen Natural Corporation changed its name to Monster Beverage Corporation. According to Yahoo Finance, on that day the value of the company stock (symbol: MNST) was $15.64 per share. On January 5, 2018, the stock closed at $63.49 per share. This represents an increase of nearly 306%. A. Discuss the factors that might influence the increase in share price. B. Consider yourself as a potential shareholder. What factors would you consider when deciding whether or not to purchase shares in Monster Beverage Corporation today?On November 7, 2013, Twitter released its initial public offering (IPO) priced at $26 per share. When the day ended, it was priced at $44.90, reportedly making about 1600 people into millionaires in a single day.[20] At the time it was considered a successful IPO. Four years later, Twitter is trading at around $18 per share. Why do you think that occurred? Is Twitter profitable? How can you find out?The Dunn Corporation is planning to pay dividends of $540000. There are 270000 shares outstanding, and earnings per share are $4. The stock should sell for $48 after the ex-dividend date. If, instead of paying a dividend, the firm decides to repurchase stock,a. What should be the repurchase price? b. How many shares should be repurchased? c. What if the repurchase price is set below or above your suggested price in part a? d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock? a. 3/10, net 45 b. 3/15 net 30 c. 3/15 net 60 d.2/10 net 45
- In 2014, Gap completed $1.5 billion in share buybacks, and its stock went up by 6%. Which of the following is a reason stock prices go up after the announcement of a stock buyback? a. Signaling b. Anti-Dilution c. Value Creation d. TaxesAn investor is considering purchasing one of the following three stocks. Stock X has a market capitalization of $77 billion, pays a relatively high dividend with little increase in earnings, and has a P/E ratio of 1212. Stock Y has a market capitalization of $6464 billion but does not currently pay a dividend. Stock Y has a P/E ratio of 3939. Stock Z, a housing industry company, has a market capitalization of $804804 million and a P/E of 1717. a. Classify these stocks according to their market capitalizations. b. Which of the three would you classify as a growth stock? Why? c. Which stock would be most appropriate for an aggressive investor? d. Which stock would be most appropriate for someone seeking a combination of safety and earnings? Question content area bottom Part 1 a. Stock X is classified as a (1) stock. (Select from the drop-down menu.) Part 2 Stock Y is classified as a (2) stock. (Select from the drop-down menu.) Part 3 Stock Z is…At the present time, Ferro Enterprises does not have any preferred stock outstanding but is looking to include preferred stock in its capital structure in the future. Ferro has found some institutional investors that are willing to purchase its preferred stock issue provided that it pays a perpetual dividend of $11 per share. If the investors pay $95.70 per share for their investment, then Ferro’s cost of preferred stock (rounded to four decimal places) will be: A. 12.0690% B. 11.4943% C. 12.6437% D. 13.2184%
- The CFO of General Electric corporation is deciding if his company should invest 500,000 shares of Lightbridges industries.They manufacture innovative smart led light systems for residential homes.Lightbridge industries stock price is currently listed at $24.84 per share, and the expected dividend yield is 5.4%. a) What is the expected value of the first dividend payment at the end of the year? b)How would you use the dividend yield model to value the price of a stock if it presently does not pay dividends but is expected to pay dividends in the future?It's 2023 and Rivian Automotive is about to go public. You want to estimate the appropriate price of the shares. Similar electric vehicle manufacturer companies that are public trade at an earnings-per-share/price of 0.05, and an enterprise value to sales of 12. Rivian has negative income of $10 per share and sales of $400 million. If Rivian has 100 million shares outstanding and no debt or excess cash, how much is each share worth? A). $200 B). $80 C). $24 D). $48The president of Phoenix wonders what accounts for Denver’s current (2010) higher stock price, although Phoenix currently earns more per share than Denver and frequently has paid a higher dividend. a) What factors can you observe that might help to explain this phenomenon? b) Explain every possible dividend policies you know and suggest the one you think is the best dividend policy for both Phoenix and Denver that might lead to increases in both of their share prices. What are the limitations of your suggestions? c) What are the reasons for investors to like dividend pay outs while some dislike dividend pay-outs?
- Yesterday at the market close, the stock of Kevin Spellman, Inc. was trading at $100 per share and there were 500,000 shares outstanding. This morning before the market opened, Kevin Spellman, Inc. announced that it was doing a 5:1 stock split. Under the efficient market hypothesis and with no new information, what will be the new stock price in dollars per share?Foster Enterprises' stock is trading for $40 per share and there are currently 19 million shares outstanding. It would like to raise $95 million. Assume its underwriter charges 8% of gross proceeds. a. How many shares must it sell? b. If it expects the stock price to drop by 1% upon announcement of the SEO, how many shares should it plan to sell? c. If all of the shares are primary shares and are sold to new investors, what percentage reduction in ownership will all of the existing shareholders experience?Simon and Simon, makers of cell phones, has a history of paying a dividend of $1 per share to their shareholders. Which of the following describes the likely response to the per share price of Simon and Simon with respect to the dividend? Select one: a. The stock price will fall by $1 on the ex-dividend date b. The stock price will fall by more than $1 on the record data c. The stock price will rise by $1 on the ex-dividend date d. The stock price will rise by more than $1 on the record date e. The stock price will not rise nor fall on any of these dates
