Why is noncumulative preferred stock often considered anunattractive form of investment?
Q: Why are investors attracted to preferred stocks andcommon stocks?
A: There are two types of stock. These are equity stock and preferred stock. Preferred stock is the…
Q: risk-taker (likes to take risks) type of investor prefer equities over fixed income?
A: Most of investors invest in the equity and like to take high risk and would invest in stock market.
Q: What is Restricted Stock Plans?
A:
Q: Should managers focus directly on the stock’s actual market price or its intrinsic value, or are…
A: The market price (MP) is the current price at which they can purchase or offer a resource or asset…
Q: What’s the difference between a stock’s current market price and its intrinsic value?
A: Stock Current market price is the price at which the stock traded in the market. Intrinsic value…
Q: Would an investor concerned about market volatility be happier investing in large cap or small cap…
A: Market volatility is a standard to measure the rate of return of money or investment. Market…
Q: What is the cost of the preferred stock, including flotation?
A: Cost of Preferred stock Rp = Annual Dividend/Current market price - floatation cost
Q: In theory, only systematic risk matters for the required return of a stock. Why does non-systematic…
A: Systematic risk refers to those which impacts the whole market rather than on particular stock…
Q: Does fundamental or technical analysis provide better knowledge for investing in securities?
A: Fundamental analysis is the method of measuring the intrinsic value of a stock by using the…
Q: What are the advantages of using restricted stock to compensateemployees?
A: Restricted stock are the shares of a company, which is issued to its employees, but not entirely…
Q: What happens if someone is not given the Beta for a stock that they are analyzing? Will they still…
A: CAPM described the relationship between systematic risk and expected rate of return. The equation is…
Q: What is the primary motivation for a forward stock split?
A: Here is the Answer
Q: According to your analysis, stock ABC is overvalued. What is the best course of action?
A: Stock Overvalued: A stock is said to be overvalued when its current market price is greater than…
Q: How can an investor benefit from ane equity investment that does not pay dividends?
A: In layman’s words, financial management is the management of the finance or funds in an…
Q: What factors are important when calculating the intrinsic value of a stock?
A: Intrinsic value is the current value of the stock. It is calculated by using the following formula:…
Q: When would individual equity securities be a better choice over ETFs for a risk adverse investor?…
A: There are various alternatives available for investment. Equity security and ETFs are also an…
Q: Why doesn’t a volatile stock price necessarily imply irrationalpricing?
A: Introduction: Volatile is nothing but a variation that is not constant. Volatile stocks are such…
Q: What is the difference between cumulative and noncumulative preferred stock?
A: Cumulative preference shares: Under a cumulative preference share, if the dividend payments have…
Q: What is the classification of Equity investments for which the investor does not have significant…
A: When a equity investment is made and if such investment does not result in significant influence,…
Q: is passive stock investing the superior approach?
A: Active investing is when the money is invested in investment stocks that have been selected by a…
Q: Which of the following is NOT an investment an option stock bond cord
A: An option is an investment, in this buyer and seller interact and buying and selling of underlying…
Q: Discuss whether you think the stock is a good investment or not.
A: Stock is essentially an equity instrument in which the investor gets part ownership in the company…
Q: In your opinion, what is the most compelling justification for a forward stock split?
A: This question explains about the most compelling justification for a forward stock split
Q: Are securities that provide for a sinking fund regarded as beingriskier than those without this type…
A: Introduction: A sinking fund is nothing but a set up by an economic institution by setting aside…
Q: What are the advantages and disadvantages of investing in the stock market vs the bond market?
A: Investing in the stock market is purchasing corporate shares and gaining control of the firm.…
Q: What are the advantages and disadvantages of preferred stock tothe issuer?
A: Preference shares, which are issued by companies seeking to raise capital, combine the…
Q: If a stock’s market value exceeds its book value, then the stock is overpriced. Do you agree?…
A: Market value depends on a lot of factors such as 1. Potential future earnings 2. Non Tangibles which…
Q: Do you think we still need to study common stock valuation, given the Efficient Market Hypothesis?…
A: Efficient Market Hypothesis represents the stock prices after considering all the information…
Q: Why might other investors prefer low-dividend-paying stocks?
A: Investors determine the dividend as part of the stock value of a stock when stock offers a dividend.
Q: In what major ways do stocks differ from bonds? When would bonds be a better investment choice than…
A: Bonds are units of corporate debts issued by companies and securitized as tradable assets. Shares…
Q: What is the difference between a stock’s price and its intrinsic value? Why do investors and…
A:
Q: What is the difference between a diversifiable riskand a nondiversifiable risk? Should stock…
A: The diversifiable risk or unsystematic risk: It may be a kind of risk particular to a given economy,…
Q: NOT right for the buy-and-hold investment strategy?
A: Strategy refers to the plan which is followed by the managers to achieve the goals of an…
Q: What is restricted stock?
A: Definition: Common stock: Common stock is the instrument used by the company for raising funds from…
Q: Why is premium on issue of debentures considered a capital profit?
A: Debenture: Debenture is a type of debt instrument and it is unsecured by collateral. Since,…
Q: Do you agree with the following statement? And explain why. “The Capital Asset Pricing Model [CAPM]…
A: The Capital Asset Pricing model is used to price securities based on its systematic risk. It…
Q: Which investment management style would an equities fund manager who utilises a value approach to…
A: Fundamental analysis (FA) It may be a strategy of calculating the intrinsic value of a security by…
Q: “When the stock market rises, investment spending isincreasing.” Is this statement true, false, or…
A: When the stock market rises, investment spending isincreasing. false
Q: Why is it reasonable to ignore diversifiable risk and care only about nondiversififiable risk? What…
A: Diversifiable risk is that risk that can be easily diversified by making the investment into…
Q: investment anomalies and biases that illustrate investor’s deviation from CAPM.
A: Capital Asset Pricing Model (CAPM) is used as a relationship between the required rate of return and…
Q: Who are the major purchasers of nonconvertible preferred stock? Why?
A: Mostly, the buyers of preferred stocks are institutional investors because they get an incentive…
Why is noncumulative
unattractive form of investment?
Step by step
Solved in 2 steps
- Discuss whether you think the stock is a good investment or not.What is the difference between a diversifiable riskand a nondiversifiable risk? Should stock portfoliomanagers try to eliminate both types of risk?a. What is the relationship between the expected return of a stock and its fair expected return? When is a stock underpriced, overpriced, or fairly priced?
- What does the capital asset pricing model (CAPM) calculate? a. The expected rate of return on an individual stock with respect to the risk-free rate of return b. The expected rate of return of an individual stock based on its overall risk c. The expected rate of return of an individual stock with respect to its market risk only d. The expected rate of return of an individual stock reflecting its financial risk Clear my choiceWhy is preferred stock “preferred”?