D6) Finance the stock of apsara ltd is currently trading at a price of 500 another stock reynolds ( with similar cost of equity i .e., 20%) is trading at 400 per share. If the current divident per share paid by both reynolds and apsara is the same, then what would be the reasons behind the diffrence in stock prices of both these companies. explain your answer with adequate rationale
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- (iii) Presently, your company’s Face Value of Equity Share RO 10 and Market Value of your Share in MSM is RO 25 per share. In order to increase the trading volume and market liquidity of your company stock, will you suggest the management to go for stock split? Explain your management about concept of stock slip with the advantage of splitting the stock of your company with the current scenario. (iv) Given the current scenario COVID 19 and its impact on Cement sector in the near future, what are the factors that you consider affecting the dividend policy of your company? Critically evaluate and justify.the balance sheet look like after the dividends are paid? Q.4 Rudolph Corporation is evaluating an extra dividend versus a share repurchase. In either case, $11,000 would be spent. Current earnings are $1.40 per share, and the stock currently sells for $58 per share. There are 2,000 shares outstanding. Ignore taxes and other imperfections in answering the first two questions. (a) Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. (b) What will be the effect on Rudolph's EPS and P/E ratio under the two different scenarios? (c) In the real world, provided tax deductions are made, which of these actions would you recommend? Why? O Search END OF ASSIGNMENT hp 11 - what will 0 1 W Vb. Suppose Cumma Technology stock currently trades for $10.74 per share. What arbitrage opportunity is available? What assumptions are necessary to exploit this opportunity? If Cumma Technology stock currently trades for $10.74 per share, an example of an arbitrage opportunity that exists today which requires no future cash flow obligations would be: (Select from the drop-down menus and round to two decimal places. Sell million shares of current price of $ and borrow $ at the current price of $ million. and buy million shares of at the
- Mf2. 1. Consider the data in the following table for a hypothetical two-stock version of the Dow Jones Industrial Average. a) Calculate the percentage change in the index value. b) Suppose firm XYZ from part (a) were to split two for one during the period (price drops to $35 immediately after the split and the new final price is $30). Calculate the percentage change in the index value. c) If this was for S&P500-type index, what is the percentage change in the index value? Is it affected by the stock split of firm XYZ?If Gamma Ltd. is a company that prohibits dividend payments entirely and forever, what will its stock be worth? Select one: a. Its stock price will be infinitely large. b. Its stock price will be lower than other similar companies. c. Its stock price must be calculated with the formula Benchmark P/E ratio x EPS. d. Its stock will be worth nothing. e. Its stock price must be calculated using the formula P = D/r.Fun Tyne plc declares a dividend payment of 20p per share. Ignoring taxes and the time value of money, and assuming that markets are efficient, you would expect stock price to:a. Immediately increase by 20p on the payment dateb. Immediately increase by 20p on the ex-dividend datec. Immediately decrease by 20p on the declaration dated. Immediately decrease by 20p on the ex-dividend datee. None of the above
- Which of the following statements is FALSE of the dividend-discount model Pn= Dn+1/(r-g)? a. The dividend-discount model values the stock based on a forecast of the future dividends paid to shareholders. b. The value the stock for a firm with rapid or changing growth can be determined just with the dividend-discount model. C. The simplest forecast for the firm's future dividends states that they will grow at a constant rate, i.e., forever. d. As firms mature, their growth slows to rates more typical of established companies.1. Fun Tyne plc declares a dividend payment of 20p per share. Ignoring taxes and the time value of money, and assuming that markets are efficient, you would expect stock price to: a. Immediately increase by 20p on the payment date b. Immediately increase by 20p on the ex-dividend date c. Immediately decrease by 20p on the declaration date d. Immediately decrease by 20p on the ex-dividend date e. Noneoftheabove 2. Lois selects securities to invest in after carefully examining the fundamentals of a company, using the accounting statements in its annual reports. Peter seeks to earn abnormal returns solely by studying stock price charts and investing based on the patterns he finds in the past prices. Which one of the following statements is correct? a. If Lois earns abnormal returns this violates weak-form market efficiency. If Peter earns abnormal returns this violates strong-form market efficiency. b. If Lois earns abnormal returns this violates strong-form market efficiency. If Peter…Nizwa investment company is willing to buy the equity shares directly from various companies as they think that buying the shares at the first moment will always give benefits for long timeThe market from where this transaction will be carried out is termed as a.Primary Market b.Regular Market c.Secondary Market d.None of the options A financial statement which shows the status of the worth of a company on a certain date is known as a.Cash flow statement b.Balance Sheet c.All of the options
- 10.Which of the following statement on stock valuation is incorrect?a.In dividend discount model, the stock value is the present value of all future dividends.b.We may use the dividend discount model to value all firms. c.Enterprise value is the sum of equity and debt minus cash. d.We may use price-earnings ratio to compute the value to comparable firms.A. What is the investor's required rate of return for Green Gadgets' stock? ________% (round to two decimal paces) B. Assuming that the investor's required rate of return for Green Gadget's stock does not change, what would you expect to happen to the price of its common stock if it cuts dividend to $3? $_______ (round to the nearest cent) C. Should Green Gadgeds cut its dividend? ( select from the drop down menus) Green Gadgets Should / Should not cut the dividend because cutting the dividend will increase / decrease the value of the common stock.[multiple choice questions] INDO Inc. always pays all of its earnings as dividends, and therefore has no retained earnings. The same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity. The targeted capital structure consists of: common stock, preferred stock, and debt. Which of the following events will reduce WACC? a. The market risk premium is decreasing. b. Flotation costs associated with issuing new common stock increase. c. The company's beta is increasing. d. Inflation is expected to increase. e. The flotation costs associated with issuing preferred stock increase.
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