, $10 billion in preferred stock, and $20 billion in common stock... A. How much capital is it worth? B. How much would it theoretically take to manage it? C. Practically, how much would it take to control it?
In the Chart
1. What percentage of 2000's disposable income is invested?
2. How much should be invested if you have $4,000 in cash?
If a corporation holds $40 billion in bonds, $10 billion in
A. How much capital is it worth?
B. How much would it theoretically take to manage it?
C. Practically, how much would it take to control it?
If a corporation holds $40 billion in bonds, $10 billion in preferred stock, and $20 billion in common stock...
A. How much capital is it worth?
B. How much would it theoretically take to manage it?
C. Practically, how much would it take to control it?
Answer to the above questions: Please fallow the answer below
a.$70 billion
b.$10 billion plus $1
c.$1 billion to $2 billion
Step-by-step explanation
a. Capitalization is obtained by summing the money in preferred stock, common stock and bonds.
Capitalization = $10 billion +$20 billion + $40 billion
= $70 billion
b. To control the corporation, the corporation needs to own at least 50 percent of the common stock. Therefore, theoretically, it will take 50% of the common stock plus $1, for the corporation to control it.
= (50% x $20 billion) plus $1
= $10 billion plus $1
c. To obtain how much it would take to practically control the corporation we proceed as follows:
= 5 percent of the common stock
= 0.05*$20 billion
= $1 billion
This is the lowest amount required to control the corporation
The highest amount therefore would be $1 billion x 2 = $2 billion
Then the amount of control ranges between $1 billion to $2 billion
Step by step
Solved in 2 steps
