Why a firm may repurchase its own common stock

Assignment Help Financial Management
Reference no: EM13928772

1. Define the following terms associated with common stock:

a. Nonvoting stock d. Stock dividend

b. Stock split e. Book value

c. Reverse stock split f. Treasury stock

2. Does the retained earnings figure on a company's balance sheet indicate the amount of funds the company has available for current dividends or capital expenditures? Explain fully.

3. Discuss the reasons why a firm may repurchase its own common stock.

4. Explain the differences between par value, book value, and market value per share of common stock.

5. Discuss the various stockholder rights.

6. What factor or factors make the valuation of common stocks more complicated than the valuation of bonds and preferred stocks?

7. According to the general dividend valuation model, a firm that reinvests all its earnings and pays no cash dividends can still have a common stock value greater than zero. How is this possible?

Reference no: EM13928772

Questions Cloud

Normal distribution and the standard normal distribution : Included with each section or problem are reference examples and end of section exercises that can be used as a guide. Be sure to show your work in case partial credit is awarded. To receive full credit, work must be shown if applicable.
Should you buy the given debentures : The debentures are callable two years from now at $1,090. If you require a 20 percent rate of return on investments of this perceived risk level, should you buy these debentures?
What amount of gain of loss will be recognized : An asset which costs $29,800 and has accumulated depreciation of $8,000 is sold for $21,600. What amount of gain of loss will be recognized when the asset is sold?
Confidence intervals for the mean : Find the critical value zc necessary to form a confidence interval at the given level of confidence.
Why a firm may repurchase its own common stock : Discuss the reasons why a firm may repurchase its own common stock. Explain the differences between par value, book value, and market value per share of common stock.
Role of the marketing function : What is the role of the marketing function in business? In 200 to 250 words, explain the role of the marketing function. What are some activities of the marketing department? Explain how the marketing function determines customer value. Respond to ..
What is the difference between a project risk and an issue : Define the difference between Business Process Re-engineering (BPR) and Business Process Management (BPM) concepts. What are the advantages and disadvantages of BPM? How do "value chain" principles apply to BPR and BPM? Why should an IT manager kn..
Problem regarding the products and services : It can be harder to sell an intangible service than a tangible product. After reading Chapter 3 of the text, pick one of the cells in Table 3.4: "Service Classifications" and name a service offered in that class-for example, business remodeling se..
Introduction to hypothesis testing : State the claim mathematically. Then write the null and alternative hypothesis. Determine whether the hypothesis test is left-tailed, right-tailed, or two-tailed.

Reviews

Write a Review

Financial Management Questions & Answers

  Annual payment mortgage at interest rate

You recently purchased a new home and obtained a $100,000 15 year annual payment mortgage (payments due at the end of each year) at a 6% interest rate. Compute the yearly payment.

  Compute the PI statistic for Project

Compute the PI statistic for Project Z if the appropriate cost of capital is 7 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Project Z Time: 0 1 2 3 4 5 Cash flow –$3,000 $670 $800 $970 $620 $420 PI S..

  Primary concerns should your firm make change to credit

In order to increase sales, the sales manager of your firm is proposing to offer 90 day credit terms rather than 60 day credit terms to customers. As a financial manager which of the following would be one of your primary concerns should your firm ma..

  What must the coupon rate be on the bonds

Volbeat Corporation has bonds on the market with 18 years to maturity, a YTM of 10.9 percent, and a current price of $939. The bonds make semiannual payments. What must the coupon rate be on the bonds?

  How much more will pay over the life of the loan

Siena Normann is buying her first new car. The purchase price is $22,350 and she’ll put $2,350 down. She will finance the car over five years at 7.25%. Her twin sister, Reese, is buying the same car, but because she has a higher credit score, her rat..

  A firm can purchase new equipment for initial investment

A firm can purchase new equipment for 16000.00 initial investment. The equipment generates an annual after tax cash inflow of 7000.00 for 4 years. Assuming that the firm has a cost of capital of 14%.  The maximum required rate of return the firm can ..

  1 fhc inc a us corporation has an account payable due in 90

1 fhc inc. a u.s. corporation has an account payable due in 90 days. use the following information to evaluate the

  What is the required return for a stock

What is the required return for a stock that has a 5.7% constant-growth rate, a price of $21.25, an expected dividend of $1.70, and a P/E ratio of 10?

  Calculate the percentage change in each bond

Bond A has 4 years left to maturity and Bond B has 8 years left to maturity. They both have a 6% coupon rate, pays semi annually, and yield is 5%. Calculate the percentage change in each bond if interest rates suddenly increased by 2%.

  What is the value of the cash coverage ratio

A firm has sales of $3,600, costs of $2,800, interest paid of $100, and depreciation of $400. The tax rate is 34%. What is the value of the cash coverage ratio?

  Investment management

Saint and Lewis Investment Management (SLIM) Inc. is considering purchasing bonds to be issued by Caterpilar Inc. The bonds have a face value of $10,000 and a coupon rate of 6%. The bonds will mature 10 years after they are issued. The issue price is..

  Exchanged a piece of land for a non-interest-bearing note

Last year the company exchanged a piece of land for a non-interest-bearing note. The note is to be paid at the rate of $15,450 per year for 9 years, beginning one year from the date of disposal of the land. An appropriate rate of interest for the not..

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