D Question 9Which of the following statements is CORRECT?O Flotation costs associated with issng new common stock nmaly ader he RACO A change in a company's target capial structure canot adlats ACCO lfa company's tar rate increases, then, all else oqual is woightd avnge ct af apal il dudsO WACC cakulations should he hased on the frr costs of all de ndital capial compen

WACC stands for Weightage Average Cost of Capital. The WACC means the average cost of all capital…

Question 9 Which of the following statements is CORRECT O Flotation costs associated with issing new common stock nmaly dr e RAC O A change in a company's targer capital structr camer aflist ts WACC. O lfa company's tar rate inreases, then, all che oqual s weihndwge ct dpalil ci O WACC cakulations should be hased on the beli cst of alde ndal apilmpm

Question 9 Which of the following statements is CORRECT O Flotation costs associated with issing new common stock nmaly dr e RAC O A change in a company's targer capital structr camer aflist ts WACC. O lfa company's tar rate inreases, then, all che oqual s weihndwge ct dpalil ci O WACC cakulations should be hased on the beli cst of alde ndal apilmpm

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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D6 The life cycle theory of dividend payment posits that a. Mature companies tend to adopt the residual dividend policy b. Growth companies tend to do a lot of share repurchases c. Mature companies tend to adopt the constant or the stable dividend payout policy d. Mature companies tend to do more share repurchases e. Young growth companies tend to adopt the residual dividend policy
D4
Question 3 The table below provides the end-of-year share prices (in GB pence) for Centrica plc and National Express Group plc the end-of-year values for the FTSE 100 Index, which is a proxy for the market portfolio, M. YEAR Centrica plc National Express Group plc Market Portfolio, M 2002 224.7 151.5 199.5 205.8 292.6 187.4 3940.4 2003 4476.9 4814.3 5618.8 6220.8 6456.9 4434.2 5412.9 2004 337.7 2005 2006 2007 2008 235.5 327.6 293.0 256.1 465.2 451.7 545.4 607.1 168.8 207.1 243.6 2009 2010 2011 2012 2013 268.1 317.8 291.6 348.3 309.6 5899.9 5572.3 5897.8 6749.1 216.1 206.5 290.9 2014 6566.1 6242.3 7142.8 2015 292.5 254.9 2016 204.0 301.9 223.5 133.1 136.1 2017 337.8 7687.8 2018 366.2 393.9 6728.1 7542.4 2019 Source: Yahoo Finance. Required: (a) Calculate the systematic risk (82 x o, the non-systematic risk (o2) – (8? x o?) and the total risk (of) of the equity shares of Centrica and National Express Group. (b) Which company's returns are better explained by the market's returns? (c)…
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Question 3 The table below provides the end-of-year share prices (in GB pence) for Centrica plc and National Express Group plc the end-of-year values for the FTSE 100 Index, which is a proxy for the market portfolio, M. | YEAR Centrica plc National Express Group plc Market Portfolio, M 2002 224.7 292.6 187.4 337.7 465.2 451.7 3940.4 151.5 199.5 2003 4476.9 2004 4814.3 2005 2006 205.8 5618.8 6220.8 6456.9 4434.2 235.5 2007 2008 327.6 293.0 256.1 268.1 545.4 607.1 2009 168.8 5412.9 207.1 243.6 216.1 5899.9 5572.3 5897.8 6749.1 2010 2011 2012 2013 317.8 291.6 348.3 309.6 292.5 204.0 223.5 133.1 206.5 2014 290.9 6566.1 6242.3 7142.8 7687.8 6728.1 7542.4 2015 2016 2017 254.9 301.9 337.8 2018 366.2 2019 136.1 393.9 Source: Yahoo Finance. Required: (a) Calculate the systematic risk (B2 x a, the non-systematic risk (o) – (B? x o2) and the total risk (of) of the equity shares of Centrica and National Express Group. (b) Which company's returns are better explained by the market's returns? (c)…
QUESTION 13 The most common practice is a variation of the: O a. residual theory of dividends O b. constant dividend payout ratio Oc. stable dividend policy O d. low dividend plus extra policy
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Question 6 The mid-year convention used to account for the fact that annual FCF is usually received throughout the year rather than at year-end results in: Higher implied share price, everything else constant. Same implied share price as with the year-end convention. Lower implied share price, everything else constant. Erroneous estimation of the implied share price.
QUESTION 11 Which of the following statements is true? O A. The DuPont Identity is used to calculate Return on Assets. O B. A company can imporve their P/E ratio by improving their EPS. OC.A Market to Book ratio greater than 1 always means the stock is undervalued. O D. All of the statements are false.
As discussed in the text, in the absence of market imperfections and tax effects, we would expect the share price to decline by the amount of the dividend payment when the stock goes ex dividend. Once we consider the role of taxes, however, this is not necessarily true. One model has been proposed that incorporates tax effects into determining the ex-dividend price: (P0 – PX)/D = (1 – TP)/(1 – TG) Here P0 is the price just before the stock goes ex, PX is the ex-dividend share price, D is the amount of the dividend per share, TP is the relevant marginal personal tax rate on dividends, and TG is the effective marginal tax rate on capital gains. a. If TP = TG = 0, how much will the share price fall when the stock goes ex? multiple choice PX P0 D b. If TP = 16 percent and TG = 0, how much will the share price fall? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)…