Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Financial Management > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Do ordinary shares have voting power?

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In case of liquidation in ordinary shares do they receive shares if so when?

A

Yes, they will be last to receive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Do ordinary shareholder’s get dividends?

A

yes, board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Do preference shares have voting rights?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Pereference shareholder’s get which type of dividend?

A

fix

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

In the case of liquidation (preference shares) get?

A

Residual value before ordinary shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Types of preference shares include?

A

cumulative and non cumulative

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Types of shares?

A

Non-voting
Redeemable shares
Dual Class

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is cost of equity?

A

Is the return which company pays theoritcally to thier shareholders in order to compensate the risk that they have taken

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How to calculate Market Cap?

A

Share price * number of shares outstanding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How surplus is calculated?

A

Issue price - Nominal Value * number of shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is treasury stock?

A

Previously outstanding stock that is bought back from shareholder’s by issuer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Do treasury stock reduces equity?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

PER?

A

P/EPS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

EPS?

A

Annual earnings / number of shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Dividend per share

A

Dividend / number of shares

17
Q

Market value to book value ratio?

A

Market value / book value

18
Q

How dividend pay out ratio is calculated?

A

= Dividends or dividends per share / Net income ( or earnings per share)

19
Q

What is stock split?

A

divide your existing shares into multiple shares to boost the liquidity

20
Q

When corporation does stock split what happens to it shares and market value? What happens to share price?

A

Shares increases but market cap stays the same. Share price goes down

21
Q

What reverse stock split does to shares and it’s price?

A

decrease number of shares and increase it’s price

22
Q

How book value per shares is calculated?

A

stockholder’s equity / number of shares

23
Q

How to calculate PV of common stock?

A

PV = Expected dividend + Expected stock price / (1 + i) ^n

24
Q

What is Ke?

A

Minimum rate of return required by shareholder’s

25
Q

How to calculate PV of common stocks?

A

The value of common stock is PV of all it’s future cashflows. In this case dividends

26
Q

Which is the perpetuity formula to calculate Pv of common stock? (constant dividend)

A

Po = Div / r

27
Q

Which is the perpetuity formula to calculate Pv of common stock? (constant dividend growth)

A

Po = DV1 / r-g

g = expected dividend growth

28
Q

Ke with no dividend growth?

A

Ke = Div / Po

29
Q

Ke with constant dividend growth?

A

Ke = Div1/Po + g

30
Q

Which is the widely use multiple to for valuation?

A

P/E

31
Q

How to calculate Ke using P/E?

A

Ke = 1/PER = EPS/P

32
Q

How to calculate earnings with PER multiple?

A

Market cap / PER

33
Q

What does rights allow to existing shareholder’s?

A

Allows them to buy shares at fixed price, in certain period

34
Q

Each existing shares is provided 1 share T or F?

A

T

35
Q

Formula. How many PSR are required to purchase a share?

A

N / M

N = Number of shares outstanding
M = Additional shares to be issued at the the rights offerings

36
Q

How to calculate value of right?

A

rights on price -subscription price / (n+1)

n = number of rights required for each new share

37
Q

How to calculate ex-right price?

A

NPo + MP1 / N + M

N = Number of outstanding old shares.
Po = Market value of outstanding old share
M = Number of new shares issued
P1 = Market value of new share

38
Q

Advantages of PSR?

A

Lower costs
No dilution of ownership
No transfer of wealth

39
Q

Dividen yield formula?

A

Annual dividend / share price

Financial Management (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions