Wisest path is to sell some stock to outside investors

Assignment Help Financial Management
Reference no: EM131057662

Another three months have passed. You are now ready to expand to your sister city and you need more capital. You decide the wisest path is to sell some stock to outside investors, but you will maintain control over your company by holding onto the majority of the stock. In this new scenario, what type of agency conflict might occur? How can you address this in advance?

Reference no: EM131057662

Questions Cloud

Issue of preferred stock outstanding : Moraine, Inc., has an issue of preferred stock outstanding that pays a $4.95 dividend every year in perpetuity. If this issue currently sells for $94 per share, what is the required return?
Divided between capital gains yield and dividend yield : Suppose you know that a company’s stock currently sells for $66 per share and the required return on the stock is 11 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. what ..
About the concerning bonds : Which of the following is FALSE concerning bonds?
Perfectly negatively correlated and their standard deviation : Stocks A and B are perfectly negatively correlated and their standard deviations are 0.20 and 0.30, respectively. What is the standard deviation of a portfolio with 50% invested in Stock A and 50% invested in Stock B?
Wisest path is to sell some stock to outside investors : Another three months have passed. You are now ready to expand to your sister city and you need more capital. You decide the wisest path is to sell some stock to outside investors, but you will maintain control over your company by holding onto the ma..
Identify futures commodity-exchange-stock or interest rate : Identify a futures commodity, exchange, stock, or interest rate. Use the internet to find a short history of the performance of this futures contract. Then research the possible reasons for this performance. What would you consider in investing in fu..
What proportion of your funds is invested in asset : You own two risky assets, both of which plot on the SML. Asset A has an expected return of 12.37% and a beta of 1.40. Asset B has an expected return of 14.13% and a beta of 1.65. If your portfolio beta is the same as the market portfolio, what propor..
What is the standard deviation of returns on the portfolio : You construct an equally weighted, two asset portfolio between ACME Corp, and American company, and Pocky Pies, a Korean company. The standard deviation of returns on ACME’s shares is 20% and 75% on Pocky. Because of international diversification, th..
Deviation of two-asset portfolio comprised of stock : What is the standard deviation of a two-asset portfolio comprised of Stock A and Stock B if both Stock A and Stock B have a variance of 0.2209, the correlation coefficient between the two stocks is -0.17, and Stock A makes up 24% of the portfolio?

Reviews

Write a Review

Financial Management Questions & Answers

  What was your dollar return on this investment

You purchased 270 shares of a particular stock at the beginning of the year at a price of $75.33. The stock paid a dividend of $.95 per share, and the stock price at the end of the year was $81.84. What was your dollar return on this investment?

  What is the pv for both the options

You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $76,000 per year for the next two years, If the interest rate is 9 percent compounded monthly, what is the..

  What will be your rate of return if price of telecom stock

You are bullish on Telecom stock. The current market price is $80 per share, and you have $9,000 of your own to invest. You borrow an additional $9,000 from your broker at an interest rate of 9% per year and invest $18,000 in the stock. a. What will ..

  What should be the market price of bonds

Jones Corp’s outstanding bonds, which have a face value of $1,000, have 10 years remaining to maturity. The bonds’ coupon rate is 6%, and interest is paid semiannually. If investors require a rate of return equal to 5% to invest in similar-risk bonds..

  What is the weighted average cost of capital

The Black Bird Company plans an expansion. The expansion is to be financed by selling $87 million in new debt and $5 million in new common stock. The before-tax required rate of return on debt is 11.39% percent and the required rate of return on equi..

  Divided between capital gains yield and dividend yield

Suppose you know that a company’s stock currently sells for $54 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’..

  Present value of these cash flows

Today is January 1, 2020. On January 1 of the years 2021 through 2030, you are to receive $50,000. If cash flows are discounted at 10% per year, the present value of these cash flows (as of today), rounded to the nearest dollar, is?

  What impact can ethics play in the world of finance

What impact can ethics play in the world of finance? Do you believe that more and more financial institutions are becoming more ethical or not? Why?

  Required return on the project and pretax cost savings

Your firm is contemplating the purchase of a new $536,500 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $52,200 at the end of that time. The tax rate is 34 percent and y..

  When a financial advisor first contacts individuals

When a Financial Advisor first contacts individuals, one of the questions that is often asked is “Why should I do business with you?” Below, please respond to this question with the three most important reasons why an individual or couple would want ..

  Take positions in financial futures to reduce

_________ take positions in financial futures to reduce their exposure to future movements in interest rates or stock prices; ________ commonly take the opposite position and thus serve as counterparties on many transactions.

  Discounting approach to the modified internal rate of return

Blue Water Systems is analyzing a project with the following cash flows. The cash flows, in order, are -$236,000 (initial cost), $137,400 (year 1 CF), $189,300 (year 2 CF) and -$25,000 (year 3 CF). Should this project be accepted based on the discoun..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd