Stock splits are given for all the reasons EXCEPT for in increases the number of outstanding shares which lowers the per share stock price O shows management's confidence that the company is doing well and will continue to do well O it keeps the market price of the stock affordable it increases the market price of the stock 79°F R

Stock splits are given for all the reasons EXCEPT for in increases the number of outstanding shares which lowers the per share stock price O shows management's confidence that the company is doing well and will continue to do well O it keeps the market price of the stock affordable it increases the market price of the stock 79°F R

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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please respond to both. A company that has a stock price of $200 must have a higher market capitalization than a company with a stock price of $2. True False Stock A has a constant dividend growth rate of 5% and Stock B has constant dividend growth rate of 6%. Both stocks have a dividend yield of 5%. Which stock has the higher required return? A B A=B Not sure
Which statement is false? - stock dividend increases the amount of paid in capital -Stock splits cause no change in the amount of the stockholder's equity - stock splits increase the number of shares -stock dividend increases total stockholders equity
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.
Managers of firms may consider a stock repurchase when they believe their stock is ____ by the market, or a offering when they believe their stock is by the market. undervalued; undervalued O overvalued; overvalued O undervalued; overvalued O overvalued; undervalued O none of the above 2255
When a company participates in a stock buyback program, it means that the company is buying shares of its own stock and taking them off the market. With this simple definition in mind, how would a company's stock buyback program affect its Earnings per Share?
4 a. Investors will only invest in a stock if it gives a higher return than they could get elsewhere. Therefore, if a stock is fairly priced, its expected return will be greater than the cost of equity capital. Skipped O False True b. A stock that is expected to pay a level dividend in perpetuity has value of Po=DIV₁/r. Any company that can reinvest to grow its earnings will have a greater value. O False True c. The dividend discount model is still logically correct even for stocks that do not currently pay a dividend. False True
According to the Gordon dividend model, which of the following variables would not affect a stock's price? the firm's expected growth rate in dividends the number of shares outstanding the shareholder's required return next year's expected dividend
Stock Valuation. Why does the value of a share of stock depend on dividends? Based on the dividend growth model, what are the two components of the total return on a share of stock? A substantial percentage of the companies listed on the NYSE and the NASDAQ don’t pay dividends, but investors are nonetheless willing to buy shares in them. If the value of a share of stock depends on dividends, how is this possible?
Flexsteel is giving out a large stock dividend. This would: A. Results in a transfer of retained earnings to the common stock account B. Reduces the par value per share by the percentage of the additional shares issued. C. Is accounted for in exactly the same manner as a stock split D. Results in a transfer of retained earnings to common stock and additional paid in capital