Your company has been very profitable and expects continued financial success. Its stock price has reached a pointwhere the company needs to make it more affordable. Wouldyou recommend a stock dividend or a stock split? Why?

Your company has been very profitable and expects continued financial success. Its stock price has reached a pointwhere the company needs to make it more affordable. Wouldyou recommend a stock dividend or a stock split? Why?

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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Your company has been very profitable and expects continued financial success. Its stock price has reached a point
where the company needs to make it more affordable. Would
you recommend a stock dividend or a stock split? Why?

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A friend of yours owns a company that is about to get a large government contract. He tells you this inside information about the contract and also mentions that it should make the company's stock price increase dramatically. If you invest based on this inside information, then you are implicitly saying that stock markets are inefficient in which context? Question 5 options: weak form efficient market theory semi-strong form efficient market theory strong form efficient market theory
As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company’s stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $3.12 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 3.20% per year.
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Please answer this question 1. Sustainable growth rate, what must a firm do to grow faster a. Issue new debt b. Increase payout ration c. increase shareholders d. Raise new preferred.
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