Answered: In recent years more than half of U.S.… | bartleby

EBK CONTEMPORARY FINANCIAL MANAGEMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12QTD

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In recent years more than half of U.S. corporations did not pay a dividend nor did they repurchase shares.

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Which of the following is FALSE about IPO underpricing? a) The average underpricing in US IPOs is between 15-20% B) IPOs in Europe and the Americas on average exhibit less underpricing compared to IPOs in Asian and Pacific markets C) The underpricing, and the subsequent large returns on the first day of trading, helps the firm receive more money for the shares offered in the IPO. D) Average IPO underpricing in the US is around 17%.
Why might a stock dividend or a stock split be of limited value to an investor? What about a stock repurchase? Companies have been spending trillions of dollars to repurchase their own shares in recent years. Why do they do so? Does it make sense for a corporation to repurchase its own stock? Explain.
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.
Which of the following is false? a. Under GAAP, companies cannot record gains on transactions involving their own shares. b. Under IFRS, companies cannot record gains on transactions involving their own shares. c. Under IFRS, the statement of stockholders’ equity is a required statement. d. Under IFRS, a company records a revaluation surplus when it experiences an increase in the price of its common stock.
Which of the following statements about preferred shares is inaccurate? Select one: a. Preferred shares carry credit ratings. b. In the event of liquidation of a firm’s assets, preferred shareholders are paid out before common shareholders. c. Preferred share dividends are always cumulative. d. Preferred shares are often callable and puttable. e. Preferred share dividend income from another Canadian corporation is tax-exempt.
A firm’s preferred stock often sells at yields below its bonds because:a. Preferred stock generally carries a higher agency rating.b. Owners of preferred stock have a prior claim on the firm’s earnings.c. Owners of preferred stock have a prior claim on a firm’s assets in the event of liquidation.d. Corporations owning stock may exclude from income taxes most of the dividend income they receive.
Explain how you will manage each of these situations. Your company invests in overseas companies paying high dividends. Due to COVID-19, foreign companies have reduced their dividend payouts.
All the following statements are incorrect about international equity markets except? a. In the international equity market, corporations cannot raise capital through IPOs, instead they can raise capital by trading in the secondary market. b. In the international equity market, corporations can easily manipulate the price of the shares since it is not regulated by any regulatory bodies. c. In the international equity market, corporations can only sell blocks of shares to Institutional investors from European Union. d. In the international equity market, corporations can sell blocks of shares to investors in a number of different countries simultaneously.
On the evening of 20 October 2008, Citic Pacific, the Hong Kong arm of the CITIC Group, China''s largest state-owned investment company, stunned the stock markets by announcing that it would lose as much as HK$15.5 billion (approximately US$2 billion). The company stated that these losses were due to foreign exchange exposures that it had been aware of for six weeks, but had failed to tell investors about. In an apologetic statement to the public, Larry Yung Chi-kin, the Chairman of Citic Pacific, acknowledged the losses and admitted that the contracts had not been properly authorised. Investors and analysts subsequently attacked Citic Pacific for its corporate governance and internal control practices. They expressed shock that the company would make such risky transactions and that it would delay the disclosure of these large potential losses for six weeks. What does this incident say about Citic Pacific''s internal risk management and its board of directors, particularly the…
6. because dividends in USA are taxed .companies should issue stock to payout a dividends false true
A corporation that is controlled by another corporation because the controlling corporation owns more than 50% of the its stock. Investments in stocks and bonds that are not intended to be converted into cash in the short term. The price of one currency stated in terms of another currency. A corporation that owns a controlling interest in another corporation. 1. Foreign Exchange Rate 2. Equity Method An accounting protocol used for long-term 3. Available-for-Sale Securities investments when the investor has significant influence over the 4. Subsidiary investee. 5. Long-Term Investments Long-term investments in debt securities that are 6. Parent not classified as held-to- maturity 7. Return on Total Assets securities. 8. Consolidated Financial Statements Financial statements that show the results of all Held-to-Maturity Securities operations under the control of a company 9. owning more than 50% of the stock of other 10. Multinational Business investee companies. A company that operates…
* Your answer is incorrect. A company may repurchase its own shares for all of the following reasons, except O to reduce the number of shares issued and thereby increase earnings per share and return on equity. to have additional shares available for use in the acquisition of other companies. O to attempt to influence the market price of the shares. O to reduce the number of shares issued in order to meet debt to equity bank covenant requirements.

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