onu3 uld tnc gi UWLII Tale III tIme price UI tme stoCKare identical?7.8 Dividends and Earnings Is it possible for a company to pay dividendswhen it has a negative net income for the year? Could this happen forlonger periods?LO 17.9 Corporate Ethics Is it unfair or unethical for corporations to createclasses of stock with unequal voting rights?LO 27.10 Voting Rights Some companies, such as Google, have created classes ofstock with little or no voting rights at all. Why would investors buy suchLO 2stock?7.11 Stock Valuation Evaluate the foliowing Sernent: Managers should notfocus on the current stock value becauc doiug so will lead to anoveremphasis on short-term profits at the expense of long-term profits.7.12 Constant Dividend Growth Model In the constant dividend growthmodel, what is the highest reasonable growth rate for a stock's dividend?LO 2LO 17.13 Voting Rights In the chapter, we mentioned that many companies havebeen under pressure to declassify their boards of directors. Why wouldinvestors want a board to be declassified? What are the advantages of aclassified board?LO 2

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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QUESTION 7 Which of the following companies will probably have the highest decline in profit if the economy goes into recession? O A company with a DOL = 5.7 A company with a DOL = 2.5 A compnay with a DOL = 5.8 A company with a DOL = 5.5
5
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
I don't understand the difference b/w Non Constant Growth (question 15) where the solution doesn't require the dividend to be multiplied by (1.05) and Non Constant Dividend (question 17) where the dividend is being multiplied by the 1+g)....It seems like they are similiar questions.
1 02:44:38 Redan, Inc., is expected to maintain a constant 6.1 percent growth rate in its dividends, indefinitely. If the company has a dividend yield of 4.6 percent, what is the required return on the company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return %
Problem 7-24 Negative Growth [LO 1] You've collected the following information from your favorite financial website. Dividend PE Yield 2.6 3.8 52-Week Price LO 10.43 Acevedo .36 33.42 69.50 14.12 Manta Energy .97 20.74 Winter Sports .32 Hi 77.40 55.81 130.93 50.41 35.00 Stock (Dividend) Georgette, Incorporated 1.54 YBM 2.00 Answer is complete but not entirely correct. Required return 4,40 2.2 6.2 1.5 Ratio 6 10 10 6 28 Close Price 13.90 40.43 88.97 15.60 77 Net Change -.24 -.01 According to your research, the growth rate in dividends for Manta Energy for the previous 10 years has been negative 10 percent. If investors feel this growth rate will continue, what is the required return for the stock? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 3.07 -.26 .18
Question 5
Q 20) Advertise-In-Print Ltd. currently has an earnings growth rate of -15%, i.e., their earnings are declining at the rate of 15% per year. This rate of earnings decline is expected to stay constant henceforth. Advertise-In-Print Ltd.'s next year's dividend per share is expected to be equal to $1.00 and their cost of equity is 10%. What is the intrinsic value of one share of stock in Advertise-In-Print Ltd. equal to? Options - $4 $10 $6.67 $20
Question 14 General Electric expects a net income next year of $19.53 million, and a free cash flow of $22.47 million. The company has a marginal corporate tax rate of 35%. Suppose General Electric increases its leverage, such that the interest expense of the company rises by $2.6 million. How will net income change? Show your work. 2. For the same increase in interest expense in part (1), how will free cash flow change? Free cash flow will increase by $2.6 million. Free cash flow will increase by less than $2.6 million. Free cash flow will remain the same. Free cash flow will decrease by less than $2.6 million Free cash flow will decrease by $2.6 million
pm.2

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7.8 Dividends and Earnings Is it possible for a company to pay dividends when it has a negative net income for the year? Could this happen for longer periods? LO 1