Firms future earnings prospects is called the hypothesis

Assignment Help Financial Management
Reference no: EM13806704

1-The idea that dividend changes reflect managers' views about a firm's future earnings prospects is called the ________ hypothesis.

2-Consider the following equation: C = P + S - PV(K) - PV(Div)

In this equation, what does the term K represent?

A) the strike price of the option

B) the price of a zero-coupon bond

C) the value of the call option

D) the stock’s current price

Reference no: EM13806704

Questions Cloud

What is the effective cost of debt of home depot : Outstanding debt of Home Depot trades with a yield to maturity of 8%. The tax rate of Home Depot is 35%. What is the effective cost of debt of Home Depot?
What is the price of the bond-maturity has a coupon rate : A bond with 20 years until maturity has a coupon rate of 7.4 percent and a yield to maturity of 7.5 percent. What is the price of the bond?
What is the current bond price : Aloha Inc. has 6 percent coupon bonds on the market that have 9 years left to maturity. If the YTM on these bonds is 7.6 percent, what is the current bond price?
What is the yield to maturity for these bonds : Atlantis Fisheries issues zero coupon bonds on the market at a price of $415 per bond. Each bond has a face value of $1,000 payable at maturity in 17 years. What is the yield to maturity for these bonds?
Firms future earnings prospects is called the hypothesis : The idea that dividend changes reflect managers' views about a firm's future earnings prospects is called the ________ hypothesis. Consider the following equation: C = P + S - PV(K) - PV(Div). In this equation, what does the term K represent?
Call option-position until maturity : Suppose you purchase a call option for $5 and a strike price of $40. On the expiration day, the price of the stock is $55. What is the return on the call option if you hold your position until maturity?
Short-term cash in a particular money market investment : The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 per..
The bond equivalent yield and the effective annual return : A Treasury bill with 136 days to maturity is quoted at 96.012. What is the bank discount yield, the bond equivalent yield, and the effective annual return? (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal ..
Cash management system free up : Norma’s Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. If the com..

Reviews

Write a Review

Financial Management Questions & Answers

  Estimate of the stocks current price

A company currently pays a dividend of $3.75 per share (D0 = $3.75). It is estimated that the company's dividend will grow at a rate of 21% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.0..

  Inventory turnover ratio and days sales in inventory

Sorenson Inc. has sales of $5,712,000, a gross profit margin of 27.45 percent, and inventory of $937,000. What are the company’s inventory turnover ratio and days’ sales in inventory?

  Long-term investment decision and npv method

Jenny Jenks has researched the financial pros and cons of entering into a 1-year MBA program at her state university. The tuition and books for the master’s program will have an up-front cost of $50,000. If she enrolls in an MBA program, Jenny will q..

  Investors expect microtech to begin paying dividends

Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.50 coming 3 years from toda..

  Prepare the scope and objectives of the risk management

in this assignment you will create a risk management plan. you have a budget of 100000 and a timeline of six 6 months

  Calculate the return the stock had at time of margin call

An investor buys $8,000 worth of a stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. In one year the investor gets a margin call.

  What net investment is required to acquire the icx system

What net investment is required to acquire the ICX system and replace the old system and compute the annual net cash flows associated with the purchase of the ICX system.Fred and Frieda have always wanted to enter the blueberry business.

  Find a publicly traded stock that pays a dividend

Find a publicly traded stock that pays a dividend. Find an estimate of cash flow (you can use EBITDA or Levered Cash flow - but make sure it is adjusted to be a per share calculation), and estimate the intrinsic value of the stock using dividends ass..

  Construct the premium amortization schedule

A bond has a face value of $2,000 redeemable in 5 years at a coupon rate of 8%. Construct the premium amortization schedule if the bond is to be purchased to yield 6%.

  Fixed costs-variable costs

A company has $7.30 per unit variable costs and $5 per unit fixed costs at a volume of 50,000 units. If the company marks up total costs by 0.51, what price should be charged if 70,000 units are expected to be sold?

  What is the yield to maturity on treasury strips

What is the yield to maturity on a Treasury STRIPS with 4 years to maturity and a quoted price of 87.269? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

  What was the inflation rate of airfare

As reported by the Bureau of Labor Statistics, the CPI for Airfare in 2263 was 583.9 (using a base year of 1914 = 100). The CPI for Airfare in 2264 was 615.8. Based on this data, what was the inflation rate of airfare from 2263 to 2264?

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