Explain about the equity claims in the financial security, Financial Management

Assignment Help:

Explain about the equity claims in the financial security.

Equity classifies claims to shares into the net income and assets of a firm, and they do not contain a maturity date. But into terms of economic rights, equity claims be different from debt instruments for several purposes.

a. First, firms are not contractually obliged to create periodic payments to equity holders: there payment of dividends is a discretionary conclusion of the firm.

b. Second, firms should pay all their debt holders before they create any payment to equity holders: thus equity holders are residual claimants.


Related Discussions:- Explain about the equity claims in the financial security

What is deposit method, Q. What is Deposit Method? Deposit Method - Rel...

Q. What is Deposit Method? Deposit Method - Related to sales of real estate, under this method seller doesn't recognize any profits, doesn't record a note RECEIVABLE and contin

Condition market to book value ratios be misleading, Under what circumstanc...

Under what circumstances would market to book value ratios be misleading?  Explain. The Market to Book ratio is helpful, but it is just only a rough approximation of how liquid

Zero base budgets, Zero base budgets: this is a new technique, which was f...

Zero base budgets: this is a new technique, which was first used by the US Department of Agriculture in 1961. Texas instruments, an MNC, have used it in the private sector.  But,

Explain opportunity costs affect the capital budgeting, How do opportunity ...

How do opportunity costs affect the capital budgeting decision-making process? Opportunity costs imitate the foregone benefits of the alternative not chosen while a capital budge

Illustrate modern method of measurements, Q. Illustrate Modern Method of Me...

Q. Illustrate Modern Method of Measurements? Holding Period Yield: The holding period yield is one of the modern techniques on Measuring return. It serves two purposes: a) I

Wealth maximization, Wealth Maximization :- It is as well termed as value m...

Wealth Maximization :- It is as well termed as value maximization or Net Present worth maximization. This schema is now universally accepted as an appropriate criterion for making

How are financial trades made on an organized exchange, How are financial t...

How are financial trades made on an organized exchange? Every exchange-listed security is traded at a precise location on the trading floor called the post. The trading is mana

Case study - itraxx, (a) iTraxx is a group of credit derivative index man...

(a) iTraxx is a group of credit derivative index managed by the International Index Company (IIC) and covering Europe and Asia and Australia. The body in the portfolio forming th

Dividend policy, #questThe managing directors of three profitable listed co...

#questThe managing directors of three profitable listed companies discussed their companies'' dividend policies at a business lunch. Company A; has deliberately paid no dividends

Explain the term- administration of decisions, Explain the term- administra...

Explain the term- administration of decisions Conformance, compliance and efficiency This is focussed on the "administration of decisions" . Processes and procedures m

Write Your Message!

Captcha
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