Suppose A Company Has Both A Preferred Stock Issue And A

4. Dividend Growth Model Under what two assumptions can we use the dividend growth model presented in the chapter to determine the value of a share of stock? Comment on the reasonableness of these assumptions.

5. Common versus Preferred Stock Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a $2 dividend. Which do you think will have a higher price, a share of the preferred or a share of the common?

6. Dividend Growth Model Based on the dividend growth model, what are the two components of the total return on a share of stock? Which do you think is typically larger?

7. Growth Rate In the context of the dividend growth model, is it true that the growth rate in dividends and the growth rate in the price of the stock are identical?

8. Voting Rights When it comes to voting in elections, what are the differences between U.S. political democracy and U.S. corporate democracy?

9. Corporate Ethics Is it unfair or unethical for corporations to create classes of stock with unequal voting rights?

10. Voting Rights Some companies, such as Reader's Digest, have created classes of stock with no voting rights at all. Why would investors buy such stock?

11. Stock Valuation Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits.

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Responses

  • Stefanie
    Is it unethical for corporations to create classes of stock with unequal voting rights?
    8 years ago
  • Richard McCaw
    Is it unfair or unethical for corporation to create classes of stock with unequal voting right?
    6 years ago

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