-) Which of the following is NOT a reason companies purchase their own stock as treasury stock?O The company wants to increase its EPSO The company wants to have shares available for employee stock options.The company wants to increase stockholders' equity.O The company feels the stock is undervalued in the marketplace.4

Treasury stock, also known as treasury shares or reacquired shares, refers to shares of a company's…

Answered: -) Which of the following is NOT a…

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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If the stock market is efficient, why do companies manage their earnings? O To avoid violating debt covenants. O To receive bonuses based on reported earnings. O Because companies do not believe the Efficient Market Hypothesis. O All of the above.
4. Why do companies give stock-based compensation (e.g. stock options) to employee? Please describe some examples of stock- based compensations.
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?
Explain why the following statement is wrong: “The stock price is equal to the value of equity, divided by shares outstanding. Therefore, companies should avoid issuing equity because the number of shares outstanding goes up and thus the stock price would decrease."
Which of the following statements is correct? A. The optimal dividend policy is the one that satisfies management, not shareholders. B. The use of debt financing has no effect on earnings per share (EPS) or stock price. C. Stock price is dependent on the projected EPS and the use of debt, but not on the timing of the earnings stream. D. The riskiness of projected EPS can impact the firm's value. E. Dlvidend policy is one aspect of the firm's financial policy that is determined solely by the shareholders. Reset Selection
Which of the following describes preferred stock? a. Stock that sells for a very high price b. Stock that is sold to employees of the company as a performance incentive c. Stock which gives shareholders certain preferences and advantages over common stock d. Stock that is purchased by the corporation for investment purposes
True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. False: Flotation costs are additional costs associated with raising new common stock. True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated Alpha Moose Transporters is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $550,000. The rate of return that Alpha Moose expects to earn on its project (net of its flotation costs) is (rounded to two decimal places) Sunny Day Manufacturing Company has a current stock price of…
Question: I have a question about the stock market. I've never understood and always puzzled about something extremely basic and fundamental about how the stock market works. According to my understanding, a firm issues a certain number of shares, and the value of those shares is determined by supply and demand. However, it appears that I, and anybody else, can purchase or sell any number of shares at the present stock price at any time. So, what is the mechanism that influences the price of a stock? If I check at the stock price of business X and find that it is selling for $100 a share, I, like anyone else, can pick whether to buy one share for $100 or one million shares for $100. So, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per share? The stock price does not appear to move up unless all available shares have been purchased, nor does it appear to move down unless there are persons prepared to sell shares for less than the market asking…
Explain why the following statement is wrong (1 paragraph maximum): "The main reason why some companies prefer to return cash to shareholders through stock repurchases, rather than dividends, is because repurchases reduce the number of share outstanding and thus tend to increase the stock price."
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?
Give typing answer with explanation and conclusion The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to a. Maximize its expected EPS. b. Minimize the chances of losses. c. Maximize the stock price on a specific target date. d. Maximize its expected total corporate income. e. Maximize the stock price per share over the long run, which is the stock's intrinsic value.
Why would a corporation redeem its stock? a. To decrease the per-share book value of the stock held by shareholders b. To increase the per-share price of the stock on the open market c. To increase the per-share book value of the stock held by the corporation d. To decrease the per-share book value of the stock on the open market

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