hich statement about book value per share (BVPS) is true??? A. Market price per share usually approximates BVPS. B. BVPS can be misleading because it is based on historical cost. C. Market price per share greater than BVPS is an indication of an overvalued stock D. BVPS is the amount that would be paid to shareholders if the firm is sold to another firm

hich statement about book value per share (BVPS) is true??? A. Market price per share usually approximates BVPS. B. BVPS can be misleading because it is based on historical cost. C. Market price per share greater than BVPS is an indication of an overvalued stock D. BVPS is the amount that would be paid to shareholders if the firm is sold to another firm

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 8QTD

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Which statement about book value per share (BVPS) is true? A. Market price per share usually approximates BVPS. B. BVPS can be misleading because it is based on historical cost. C. Market price per share greater than BVPS is an indication of an overvalued stock. D. BVPS is the amount that would be paid to shareholders if the firm is sold to another firm.
Choose the letter of the correct answer 2. When the cost model/method is used to account for an investment, which of the following would not result in an adjustment to the amount recorded in the investment account? A. The investee declares a regular dividend B. The investor sells some of the stock C. The investee declares a liquidating dividend D. The stock’s market value decreases to a point where is it below the investor’s cost
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? b. Explain what happens to the firm’s cost of equity, cost of debt, and cost of capital when the firm increases the amount of debt in its capital structure. Assume all Modigliani and Miller assumptions hold and that there are no taxes. c. How can we use the internal rate of return to evaluate whether we should pursue a specific project? Should we pursue a project when the cost of capital is higher than the internal rate of return?
Which of the folowwing statements about a company's stock valuation is incorrect? Select one: a. the value is not a function of the amount of the cash flows(FV) b. an asset which is expected to produce future cash flows has a value which is equilavent to the present value of all those expected cash flows c. the intrinsic value is that value which an investor places on an asset d. the value is a function of the timing of the cash flows(n).
The higher the firm's flotation cost for new common equity, the more likely the firm is to use preferred stock, which has no flotation cost, and reinvested earnings, whose cost is the average return on the assets that are acquired. Group of answer choices True False
Explain the effect of D/E on asset returns, equity returns (assuming that cost of debt is not affected), asset beta and equity beta (assuming that debt beta is zero). Should an investor choose to invest in a stock of a company with high or low D/E, or why expected returns on these stocks are equivalent, although they are not equal?
Which of the following statements is correct? A. The optimal dividend policy is the one that satisfies management, not shareholders. B. The use of debt financing has no effect on earnings per share (EPS) or stock price. C. Stock price is dependent on the projected EPS and the use of debt, but not on the timing of the earnings stream. D. The riskiness of projected EPS can impact the firm's value. E. Dlvidend policy is one aspect of the firm's financial policy that is determined solely by the shareholders. Reset Selection
“The market capitalisation of a brand as reflected by their share price on the stock exchange isoften far higher than the actual asset value of the company.” Question) Evaluate this statement in relation to the difficulties encountered in valuing acompany when trying to sell it.
Which of the following is False in regards to Share premium account? a. It will be shown under the shareholders equity b. It will be collected when the issue price is more than the par value of shares c. It will be collected when the par value of share is more than the issue price d. It will not be shown under current assets in the balance sheeting
Which of the following is false? An increase in the cost of common share may be due to an increase in share’s beta The cost of common shares can be classified as a cost of retained earnings or cost of issuance of new shares. Floatation cost affects the cost of equity from newly issued stocks and this impacts the weighted average cost of capital The floatation cost which is deducted against the stock issue price should always be considered in all scenarios of computing the cost of ordinary stock.
Choose the correct answer: Equity security acquired for non-trading and the shares are not enough to warrant significant influence should be measured at the end of the period a. cost, being the purchase price b. cost, being the purchase price plus transaction costs c. fair value, with change in FV taken through profit or loss. d. fair value, with change in FV taken through other comprehensive income
Which of the following statements is not correct? Group of answer choices A)Purchasing fixed assets using cash decreases the current ratio. B)Accruing a commission expense will affect the net profit margin ratio. C)Increasing the financial leverage ratio guarantees the net profit margin ratio will increase. D)Purchasing treasury stock results in a decrease in the current ratio. E)All of the above are correct