ESSENTIALS OF CORPORATE FINANCE
17th Edition
ISBN: 9781260665857
Author: Ross
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 2CTCR
LO1 7.2. Stock Valuation. A substantial percentage of the companies listed on the NYSE and the NASDAQ don’t pay dividends, but investors are nonetheless willing to buy shares in them. How is this possible given your answer to the previous question?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
D6
Discuss buying back stock and splitting shares as ways in which the rate of return of stocks is affected. What is the scientific evidence on these issues?
B) Common stock hasn’t term to maturity. How then can a stock that does not pay dividends have any value? Give an example of such firms listed in the domestic market of your country.
Stock Valuation. Why does the value of a share of stock depend on dividends? Based on the dividend growth model, what are the two components of the total return on a share of stock? A substantial percentage of the companies listed on the NYSE and the NASDAQ don’t pay dividends, but investors are nonetheless willing to buy shares in them. If the value of a share of stock depends on dividends, how is this possible?
Chapter 7 Solutions
ESSENTIALS OF CORPORATE FINANCE
Ch. 7.1 - What are the relevant cash flows for valuing a...Ch. 7.1 - Does the value of a share of stock depend on how...Ch. 7.1 - What is the value of a share of stock when the...Ch. 7.1 - What is a target price on a stock? How is it...Ch. 7.2 - Prob. 7.2ACQCh. 7.2 - Prob. 7.2BCQCh. 7.2 - Why is preferred stock called preferred?Ch. 7.3 - Prob. 7.3ACQCh. 7.3 - Prob. 7.3BCQCh. 7.3 - Prob. 7.3CCQ
Ch. 7.3 - Prob. 7.3DCQCh. 7 - Section 7.1What is the total return for a stock...Ch. 7 - Prob. 7.2CCh. 7 - LO1 7.1.Stock Valuation. Why does the value of a...Ch. 7 - LO1 7.2.Stock Valuation. A substantial percentage...Ch. 7 - Dividend Policy. Referring to the previous...Ch. 7 - LO1 7.4.PRINTED BY: V.SwathiPpfeya@spi-global.com....Ch. 7 - LO1 7.5.Common versus Preferred Stock. Suppose a...Ch. 7 - Prob. 6CTCRCh. 7 - Prob. 7CTCRCh. 7 - LO1 7.8.Dividends and Earnings. Is it possible for...Ch. 7 - Prob. 9CTCRCh. 7 - Prob. 10CTCRCh. 7 - Prob. 11CTCRCh. 7 - Prob. 12CTCRCh. 7 - Prob. 13CTCRCh. 7 - Prob. 14CTCRCh. 7 - Stock Values. Gilmore, Inc., just paid a dividend...Ch. 7 - Stock Values. The next dividend payment by Dizzle,...Ch. 7 - Prob. 3QPCh. 7 - Stock Values. Take Time Corporation will pay a...Ch. 7 - Stock Valuation. Mitchell, Inc., is expected to...Ch. 7 - Stock Valuation. Suppose you know that a companys...Ch. 7 - Stock Valuation. Burkhardt Corp. pays a constant...Ch. 7 - Valuing Preferred Stock. Smiling Elephant, Inc.,...Ch. 7 - Prob. 9QPCh. 7 - Growth Rates. The stock price of Baskett Co. is 73...Ch. 7 - Valuing Preferred Stock. E-Eyes.com has a new...Ch. 7 - Stock Valuation. Wesen Corp. will pay a dividend...Ch. 7 - Prob. 13QPCh. 7 - Prob. 14QPCh. 7 - Nonconstant Growth. Metallica Bearings, Inc., is a...Ch. 7 - Nonconstant Dividends. Hot Wings, Inc., has an odd...Ch. 7 - Nonconstant Dividends. Apocalyptica Corporation is...Ch. 7 - Supernormal Growth. Burton Corp. is growing...Ch. 7 - Negative Growth. Antiques R Us is a mature...Ch. 7 - Finding the Dividend. Gontier Corporation stock...Ch. 7 - LO3 21. PRINTED BY: V.SwathiPpreya@spi-gIobal.com....Ch. 7 - Stock Valuation. According to the 2015 Value Line...Ch. 7 - Prob. 23QPCh. 7 - Negative Growth. According to the 2015 Value Line...Ch. 7 - Prob. 25QPCh. 7 - Stock Valuation and PE. Sully Corp. currently has...Ch. 7 - Stock Valuation and PE. You have found the...Ch. 7 - Prob. 28QPCh. 7 - Stock Valuation and PE. Davis, Inc., currently has...Ch. 7 - PE and Terminal Stock Price. In practice, a common...Ch. 7 - Capital Gains versus Income. Consider four...Ch. 7 - Stock Valuation. Most corporations pay quarterly...Ch. 7 - Prob. 1CCCh. 7 - Prob. 2CC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- 18. Stock Valuation. A number of publicly traded firms pay no dividends yet investors are willing to buy shares in these firms. How is this possible? Does this violate our basic principle of stock valuation? Explainarrow_forwardQ2. Do you think that there exists an arbitrage opportunity in the stock market? Please remind the definition of arbitrage opportunities in chapter 3, and we learned about publie and private information, and their influence on stock market prices. Do you agree or disagree? Why or why not?arrow_forward1.1 Why are stocks called "equities"? Are bonds also equities? 1.2 In what ways are dividends similar to coupons on bonds? In what ways are dividends different from coupons on bonds? 1.4 How do fluctuations in stock prices affect the economy? Use your own words and no plagiarism make it short and simple answer pleasearrow_forward
- Question: I have a question about the stock market. I've never understood and always puzzled about something extremely basic and fundamental about how the stock market works. According to my understanding, a firm issues a certain number of shares, and the value of those shares is determined by supply and demand. However, it appears that I, and anybody else, can purchase or sell any number of shares at the present stock price at any time. So, what is the mechanism that influences the price of a stock? If I check at the stock price of business X and find that it is selling for $100 a share, I, like anyone else, can pick whether to buy one share for $100 or one million shares for $100. So, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per share? The stock price does not appear to move up unless all available shares have been purchased, nor does it appear to move down unless there are persons prepared to sell shares for less than the market asking…arrow_forward1. Suppose many investors are still interested in acquiring the shares of Company ABC after the initial public offering, what kind of Financial market should they go to from whom would they purchase this shares? 2. What would happen if there are no Financial market in the Financial system?arrow_forwardHi Expert,I got this theoretical question in Corporate Finance, and i was hoping for a bit of help :)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?Best,Christianarrow_forward
- Q4:4 Discuss the Dividend Discount Model in stock valuation from the following aspects (1) Explain the underlying assumptions of DDM valuation model . < (2) Identify the factors that must be estimated when value the stock with this model. (3) Explain the problems in using dividend valuation model to value the companies that are quite small and are growing rapidly.arrow_forwardWhich 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 volatilearrow_forwardExplain why the following statement is wrong: “The stock price is equal to the value of equity, divided by shares outstanding. Therefore, companies should avoid issuing equity because the number of shares outstanding goes up and thus the stock price would decrease."arrow_forward
- 2. What is the public stock market? Does the Company, such as Disney, own the stock? expalin one small paragrapharrow_forwardWhat is the Poitrowski score? What are the characteristics of shares that are suitable to be assessed with the Piotrowski framework? 2. Discuss the attractiveness of Treynor Black methodology to an investor in developed market large and medium cap equities. 3. The stock market falls by 33 percent in one day: is this necessarily inconsistent with the market hypothesis? Explain your reasoning 4. New information hits a company share such that the share price rises from 100 pence to 120 pence and then the share price rises gradually over the following 6 months to 150 pence despite any further news. Is this evidence of market efficiency? Explain your reasoning.arrow_forwardA 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. Indifferentarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education
Investing For Beginners (Stock Market); Author: Daniel Pronk;https://www.youtube.com/watch?v=6Jkdpgc407M;License: Standard Youtube License