A stockbroker advises a client to “buy preferred stock. . . . With that type of stock, . . . [you] will never have to worry about losing the dividends.” Is thebroker correct?
Q: All of the following are risks associated with buying stocks, except -- loss of interest payments if…
A: Stocks are based on market demand and supply and it is very volatile and risky.
Q: Stockholders can transfer wealth from bondholders through a variety of actions. How would the…
A: An increase in dividends- Increase in dividend would reduce the value of the net assets of the…
Q: If you were a stockholder which type of stock would you prefer? Why?
A: The company issues two types of stock i.e. Common stock and Preference stock. Common shareholders…
Q: Within the context of services provided by a stockbroker, discuss the two main types of stockbrokers…
A: Stockbroker: A stockbroker is an authorized and directed money related firm that encourages…
Q: Why do some investors prefer high-dividend-paying stocks?
A: The dividend is the returns provided to the shareholders of the company. The dividend is the income…
Q: Explain the different dividend preferences that may be attached to preferred stock. Why would…
A: Lets understand the basics. There are two types of stocks are generally there in the business which…
Q: iscuss how the stock for your company is trending and Explain why the stock is in either an uptrend…
A: Graphs are used to whether to invest in the stock or not it gives idea whether to buy the stock or…
Q: *which of the following statements is true? Select one: O Investors sell a stock when required…
A: When the stock is overvalued, which means the market price of stock is more than the intrinsic value…
Q: If a large group of investors tend to buy a company's stock, an individual might follow too. This…
A: Self Attribution is the another name of person's perception. It is the process of defining the…
Q: At time t you own one stock that pays no dividends, and observe that F(t, T) < St/Z(t, T). What…
A: Arbitrage is the act of an arbitrageur where the person buys or sells at the same time in similar…
Q: Before you put your money down and purchase a stock, what should you know about it?
A: An investor must consider certain factors which are necessary to make decision whether to buy the…
Q: As an investor, you looked at the published list of securities held by an investment company and…
A: The question is based on the concept of valuation of stock for investment position. An investor can…
Q: You discover a company stock is under-priced because the industry it's in is undervalued by the…
A: There are many strategies that investors can follow to make their investment decisions. Some use the…
Q: How do you determine if a stock is over-valued? What does that mean? If a willing buyer and a…
A: Stock is said to be over-valued when the market price is higher than the intrinsic value of the…
Q: Alhaji Haruna considers that since capital markets are efficient, he doesn’t need to read the…
A: Given that the market is efficient and does not require any research before purchasing the stocks.…
Q: How is treasury stock purchased? What ethical issues may arise from buying back company stock?
A: Treasury stock can be defined as the portion of equity which is not available for public to trade,…
Q: On the average, the announcement of a decrease in dividends can be interpreted by investors as bad…
A: A financial manager has to take three types of decisions for the company. They are investing…
Q: If the stock market is at least semistrong efficient then, O A. trading on information that you read…
A: Semi strong form of efficiency in a market says that investors and traders in the stock market will…
Q: Your firm’s CEO has just learned about options and how your firm’s equitycan be viewed as an option.…
A: Introduction: Simply stated, equity is nothing but the ownership of an asset which may be connected…
Q: What is the relationship between the expected return of a stock and its fair expected return? When…
A: Stock today is the most interesting part of the investor's life. People who like to invest in…
Q: History suggests that all stock market bubbles will eventually pop and cause severe financial loss…
A: Stock market bubble It occurs when there is a fast increase in the price of an asset that is being…
Q: Which of the following statements is FALSE? When a buyer seeks to buy a stock, the willingness of…
A: Option D is False. If the profit opportunities from having private expertise are large, other…
Q: A retiree believes that investing in a non-dividend paying growth firm, which requires the periodic…
A: A growth firm is a firm with significant profits and cash flows that shows a much higher return than…
Q: Your company has been very profitable and expects continued financial success. Its stock price has…
A: Shareholder’s equity: Shareholder’s equity is the difference between the total assets and the…
Q: If investing in the stock market today, how would your decisions be affected based on what you know…
A: Stock- It is a unit of ownership in a company's capital. It entitles the stockholder to an equal…
Q: The rationale behind granting stock options is toinduce employees to work harder and be…
A: Answer: Stock options typically offer employees the right to purchase the company’s stock or they…
Q: Is it better for a firm’s actual stock price in the market to be under, over, or equal to its…
A: Intrinsic value: Intrinsic value denotes to an investor's view of the intrinsic worth of an asset,…
Q: y Treasury stock, what happens to your assets and equity when you sell it?
A: Treasury stock are own outstanding stock which company can buy or sell in the market.
Q: in
A: The stock also referred to as equity is a form of security that indicates that the holder of the…
Q: If a company is thinking about issuing preferredstock to raise capital, what are some factors thatit…
A: Preferred stocks are the stocks which are redeemed by the firm before the redemption of equity…
Q: The disposition effect: a. Is the tendency of stock investors to sell their winning stocks and…
A: In finance disposition effect is related to behavioral finance. Disposition effect refers to the…
Q: Lois selects securities to invest in after carefully examining the fundamentals of a company, using…
A: Efficient Market Hypothesis: It declares that the financial markets are efficient informational.…
Q: What is the importance of finding intrinsic value of shares even though it is traded in the stock…
A: It is quite necessary to value the stock according to benefits provided by stock.
Q: stors with stock in various companies can face significant risk, and significant benefits. How do…
A: Yes, it is true that the stock in different companies can have a significant impact on the risk and…
Q: You buy a stock from the capital market. If the capital market is semi-strong efficient, which of…
A: When the capital market is semi strong efficient then it means that in the market the share prices…
Q: on stockholders? Explain your reasoning. (Choose all correct responses.) $38.60 to acquire the…
A: Stockholders refer to the person or an entity who bought a share or number of shares of a company
Q: Which of the following is NOT true? a. If the choice is cash, a liability has to be recorded until…
A:
Q: A stockbroker advises a client to “buy preferred stock. … With that type of stock, … [you] will…
A:
A stockbroker advises a client to “buy
broker correct?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- A stockbroker advises a client to “buy preferred stock. … With that type of stock, … [you] will never have to worry about losing the dividends.” Please let us know if the broker is correct.In a few sentences, answer the following question as completely as you can. You are discussing stock valuation techniques with your broker. You mention that your Finance professor stated that “a stock that will never pay a dividend is valueless.” Your broker says this is not true because you can always sell the stock to someone else (thus, a capital gain is possible) a share of stock represents a share of ownership in something tangible (i.e., the issuing firm).Argue for or against your broker’s position.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.
- 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.You buy a stock from the capital market. If the capital market is semi-strong efficient, which of the following statements is NOT correct? a. You cannot earn any abnormal returns above the required return by trading on public information. b. Past stock prices can be used to predict future stock prices. c. The technical analysis of publicly available information will not lead to any abnormal returns. d. The stock is fairly priced. e. Stock prices reflect all publicly available information.How do you determine if a stock is over-valued? What does that mean? If a willing buyer and a willing seller agree to buy/sell a share of stock, who can say if the share is over-valued? What are some of the traditional tools to determine if a stock is over-valued or under-valued?
- As discussed in the chapter, preferred stock offers an investor certain preferences over common stock in relation to dividends and liquidation value. In theory, these preferences should make preferred shares more attractive to potential investors than common stock. In practice, however, a majority of companies do not issue preferred stock, and most investors seem to favor putting their investment dollars into common shares. Discuss some of the reasons a company might not issue preferred stock, and why most investors choose common over preferred.A company might purchase treasury stock for all of the following reasons excepta. it wants to increase its net assets by buying its stock low and reselling it at a higher price.b. management wants to decrease the earnings per share of common stock.c. management wants to avoid a takeover by an outside party.d. the company needs the stock to distribute to employees as part of its employee stockpurchase plans.The disposition effect: a. Is the tendency of stock investors to sell their winning stocks and hold onto their losing stocks b. Is consistent with regret avoidance behaviour c. Is a consequence of investors’ preference for lottery-type stocks d. (a) & (b) e. (a), (b) & (c)
- Which of the following is FALSE about preferred stock? Select one: a. the value of a preferred stock can be calculated with the perpetuity formula b. preferred stock are expected to pay the same dividend forever c. preferred stocks are more risky than common stocks d. preferred stocks do not matureWhich of the following statements is not true about preferred stock? A.The rate of dividend is usually fixed B.Stockholders' usually have a preference as to dividends C. Stockholders always have a voting right D. Stockholders' usually have a preference as to assets upon liquidation of the corporationAt time t you own one stock that pays no dividends, and observe that F(t, T) < St/Z(t, T). What arbitrage is available to you, assuming that you can only trade the stock, ZCB and forward contract? Be precise about the transactions you should execute to exploit the arbitrage.