Raise capital by issuing new securities in secondary markets

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Reference no: EM13764963

True or false

1. Companies raise capital by issuing new securities in secondary markets.

2. Preferred dividend payments are fixed amounts paid on a regular basis.

3. Preferred stock with no fixed maturity can be valued using the present value of a perpetuity formula.

4. The value of a supernormal growth stock is the present value of the mixed growth dividends plus the present value of the constant growth dividends.

5. Grant, Inc. is a fast growing company and its dividend is expected to grow at a rate of 25 percent for the next three years. It will then settle to a constant growth rate of 10 percent. If the last dividend was $5.00 and the required rate of return is 18 percent, what is the current price of the stock?

Reference no: EM13764963

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