Which of the following statements is TRUE regarding Stocks? O A. Stocks typically have very predictable future cash flows where bonds do not. O B. You should sell stocks if you expect a bull market in stocks. Oc. Claims of lenders come before those of common stockholders. O D. The limited liability feature of corporate stocks increases the risk for shareholders.

Which of the following statements is TRUE regarding Stocks? O A. Stocks typically have very predictable future cash flows where bonds do not. O B. You should sell stocks if you expect a bull market in stocks. Oc. Claims of lenders come before those of common stockholders. O D. The limited liability feature of corporate stocks increases the risk for shareholders.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter20: Hybrid Financing: Preferred Stock, Warrants, And Convertibles

Section: Chapter Questions

Problem 3Q: What effect does the trend in stock prices (subsequent to issue) have on a firm’s ability to raise...

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Which of the following is a difference between stocks and bonds? Select one: a. cash flows to bondholders are not known and not promised, cash flows to stockholders are known and promised b. companies issue stocks to grow the company and issue debt to pay bills c. required returns on debt are typically lower than required returns on equity d. dividends are legal obligations of the firm; coupons are not. Clear my choice
From an investor's perspective, a firm's preferred stock is generally considered to be less risky than its common stock but more risky than its bonds. However, from a corporate issuer's standpoint, these risk relationships are reversed: Bonds are the most risky for the firm, preferred is next, and common is least risky. Is the above statement True or False? Please Explain.
Which of the following statements is NOT true? A. Stock owners benefit from stock price increases B. Higher stock prices allow companies access to more capital C. Common stocks are not securities D. Stock prices tend to be very volatile
A firm is planning to issue bonds to make an equity repurchase to increase its stock price. It is basing its analysis on the fact that there will be fewer shares outstanding after the repurchases, and higher earnings per share. Will the higher earnings per share always translate into a higher stock price? a. No b. Depends on stock price c. Yes d. Indifferent
Investing in stocks and bonds are different because: A) With stocks, the expected return is important, while with bonds, the expected return as well as the risk level are important. B) With both stocks and bonds, we become owners of the company, although stocks give us a bigger say in the company. C) With bonds, we look at the credit rating and the yield, while with stocks we compare the market price to the intrinsic value when investing. D) None of the above.
Common shares are the most important security issued by the companies to raise the funds. Since, return on common securities is not fixed due to which prices of the common shares also fluctuates. Which would be more appropriate for evaluating your company's stock price, a constant or non-constant growth model, and why? How would each of the factors used in these models impact your estimated value.
Indicate whether the following statements are (True) or (False) and correct the false statements: Primary and secondary markets are markets for short-term and long-term securities, respectively. Public offering is the sale of a new security issue, typically bonds or preferred stock, directly to an investor or group of investors. When considering each financial decision alternative or possible action in terms of its impact on the share price of the firm's stock, financial managers should accept only those actions that are expected to increase the firm's profitability.
Explain whether the following statements are true or false. Justify your answer and solve both the parts of this question. a) The income from bond is more uncertain compared to the income from shares b) Managers want to maximize the intrisic value of the stock not the market price of the stock.
The valuation of common stock is more complicated than the valuation of either bonds or preferred stock because... which of the below statement are true? I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertain
Common stocks that are traded on the NYSE are liquid in the sense that they canbe sold and converted to cash on short notice. Are stocks a good choice for a firm’smarketable securities portfolio? Explain.
Decide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain your reasoning. I'm putting all my savings into stocks because stocks always outperform other types of investments over the long term.Choose the correct answer below. A.The statement does make sense because stocks historically outperform bonds and cash over the long term and investing in stocks is high-risk, which offers higher returns. B.The statement does not make sense because although stocks historically outperform bonds and cash over the long term, investing in stocks is high-risk and there is no guarantee that the investment will yield a high return. C.The statement does make sense because stocks are a low-risk investment, offering predictable low returns. D.The statement does not make sense because stocks never outperform bonds and cash over the long term.
Which of the following statements about financial markets and securities are true? Most common stocks are traded over-the-counter, although the largest corporations have their shares traded at organized stock exchanges such as the Philippine Stock Exchange. A corporation acquires new funds only when its securities are sold in the primary market. Money market securities are usually more widely traded than longer-term securities and so tend to be more liquid. All of the choices are true.