mmon versus Preferred Stock Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a $2 dividend. Which do you think will have a higher price, a share of the preferred or a share of the common?

mmon versus Preferred Stock Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a $2 dividend. Which do you think will have a higher price, a share of the preferred or a share of the common?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 21MC

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in the chapter to determine the value of a share of stock? Comment on the reasonableness of these assumptions. Common versus Preferred Stock Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a $2 dividend. Which do you think will have a higher price, a share of the preferred or a LO 1 7.5 share of the common?
1. If the dividends paid on a preferred stock issue are $2.2 per share and the cost of preferred s Assume there are no flotation costs. Price of a preferred stock is a perpetuity if the answer is $10.52 Enter 10.52
Cumulative preferred stock O requires dividends in arrears to be paid before the firm can pay dividends on common. O has a right to vote cumulatively. O has a claim to dividends before bonds. Ohas a higher required return than common stock.
Required: 5. The average per-share sales price of the common stock when issue $? per share 6. The cost of the treasury stock per share $? per share 7. The total stockholders' equity $? 8. The per-share book value of the common stock assuming that there are no dividends in arrears and that the preferred stock can be redeemed at its par value $? per share
QUESTION 1 Which best describes par value for stock? A. An arbitrary amount set by the company for each share of stock B. The current market value of the stock C. The amount expected to be paid out as a dividend on a share of stock D. The value at which stock shares were issued
The cost of preferred stock is equal to the preferred stock dividend divided by the net proceeds per preferred share. 1) True 2) False
TRUE/FALSE When preferred stock has a preference as to dividends, the current year's preferred dividend must be paid before a dividend can be paid to common stockholders.
Which of the following is not true about a 2 for 1 stock split? total dollar value of stockholder's equity is unchanged the market value of a share of stockwill double the parvalue of a share of stockwillbecutinhalf the number of shares outstanding will double
3. A property holdings declared a dividend of P 9 per share for the common stock. If the common stock closes at P 76, how much is the stock yield ratio on this investment?
Which of the following transactions will increase thereturn on equity?a. Declare and issue a stock dividend.b. Split the stock 2-for-1.c. Repurchase the company’s stock.d. None of the above.
Which of the following results in increasing basic earnings per share? Select one: a. Paying more than carrying value to retire outstanding bonds. b. Issuing cumulative preferred stock. c. Repurchase of common shares. d. Issuing a 2:1 stock split. e. All of these increase basic earnings per share.
Cumulative preferred stock Orequires dividends in arrears to be paid before the firm can pay dividends on common. O has a right to vote cumulatively, has a claim to dividends before bonds. has a higher required return than common stock.