CFGB6102 Corporate Finance Stock Valuation 1. A firm’s common stock currently sells for $75 per share. The firm has total assets of $1‚000‚000 and total liabilities‚ including preferred stock‚ of $350‚000. If the firm has 10‚000 shares of common stock outstanding‚ (a) what is the book value of each share of common stock? (b) is the stock overvalued or undervalued in the marketplace? (c) what might be the reason(s) for your answer in (b). (a) (b) overvalued (c) market value of the assets
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NURITA F Jurusan Akuntansi‚ Fakultas Ekonomi‚ Universitas Syiah Kuala ABSTRACT The objective of this research is to examine the influences of earnings per share and dividend payout ratio to common stock holding period. The research was conducted at the companies listed in the LQ-45 Index in the Indonesia Stock Exchange in 2008-2010. This type of study is a hypothesis-testing research. The research method used in this research is purposive sampling. Sample in this study are companies registered in
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Common Risk Factors in the Retu rns on Stocks and Bonds Eugene F. Fama Kenneth R. French Journal of Financial Economics 1993 Presenter: 周立軒 Brief Saying… • This paper identifies Five common risk factors in the return on stocks and bonds – Two stock market factors‚ two bond market factors ‚ one market factor. – The five factors seems to explain all returns in stoc k market and bond market • Except the Low-Grade Bonds Agenda • • • • • Introduction The Steps of the Experiment Data & Variables Main
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Journal of Financial COMMON Economics 9 (1981) 139-183. STOCK REPURCHASES North-Holland Publishing Company AND MARKET SIGNALLING An Empirical Study* Theo VERMAELEN lJ/niversity of British Columbia‚ Vancouver‚ BC‚ Canada V6T 2 W5 Received January 1980‚ final version received January 1981 This paper examines the pricing behavior of securities of firms which repurchase their own shares. The results are consistent with a market in which investors
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Differences between Preferred and Common Stock All stock is not created equal. Companies offer two main types of stock: common and preferred stock‚ each with its share of advantages and disadvantages for investors. Preferred and common stocks are different in two key aspects. First‚ preferred stockholders have a greater claim to a company’s assets and earnings. This is true during the good times when the company has excess cash and decides to distribute money in the form of dividends to its
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Notes to Ben Graham’s Security Analysis 2nd and 3rd Editions Vinod Palikala August‚ 2009 As Graham notes in the preface‚ the book is “concerned chiefly with concepts‚ methods‚ standards‚ principles‚ and‚ above all‚ with logical reasoning”. To get the most out of this book‚ it is essential to see past the many seemingly rigid guidelines to understand Graham’s reasoning. This is my attempt to summarize the main message Ben Graham is trying to convey. In the book‚ it is difficult to relate the
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1. The dividend discount model (DDM) is a procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value; if the value obtained from the DDM is higher than what the shares are currently trading at‚ the stock is undervalued and vice versa. According to the DDM the price of the stock is Po= Div1/ (r-g) where Po= is the price of shares‚ Div1=Dividend next year‚ r= required rate of return‚ g=growth rate Question 4 The pattern of past and future
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much a company should pay its stockholders‚ as dividend is one that has been of concern to managers for a long time. The optimal dividend policy of a firm may be defined as the one that increases shareholders wealth by the greatest amount. It is therefore necessary‚ to understand the nature of the relationship between dividend and value of the firm. It is in the light of this that the study examines the possible effects of a firm’s dividend policy on the market price of its common stock with reference
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answers should be reported to TWO decimal places. To ensure the accuracy of your answer‚ you should perform all intermediate calculations to at least THREE decimal places. Choose FIVE questions. DO show your working. Question 1. (20 marks) Suppose that you have the following information about a company Credit rating Beta Tax expense Pre-tax income Preferred dividend rate Preferred stock par value Preferred stock price Preferred stock outstanding Common stock price Common stock par value Common stock
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violent fluctuation of earnings caused by the cyclical nature of heavy machinery and equipment sales. Although the company’s long-term sales and earnings growth had been above average‚ its cyclical nature had dampened Wall Street’s interest in the stock substantially. (Cooper’s historical operating results and financial condition are summarized in Exhibits 1 and 2.) Initial efforts to lessen the earnings volatility were not successful. Between 1959 and 1966‚ Cooper acquired (1) a supplier of portable
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