ch 7 other

One reason corporations use staggered boards is that:

It makes takeover attempts less likely to be successful.

Most voting in large corporations is done by proxy because:

Most small shareholders do not attend the annual meeting

Is a company required to pay preferred dividends?

No; the company may defer dividends on preferred stock; however they can not pay dividends to common shareholders until preferred dividends are paid.

What is the price of a stock at the end of one year (P1) if the dividend for year 2 (D2) is $5, the price for year 2 (P2) is $20, and the discount rate is 10%?

P1 = ($5 + $20)/ 1.10 = $22.73

A person who brings buyers and sellers together is called a:

broker

One requirement of the dividend growth model is:

g < R

one requirement of the dividend growth model is

g<R

Winwin corporation has 5 board members, and each shareholder gets one vote per share. the company uses a straight board voting procedure. how does this arrangement affect minority shareholders?

no minority shareholder would have enough votes to win any seat on the board

When voting for the board of directors, the number of votes a shareholder is entitled to is generally determined as follows:

one vote per share held

Suppose Bob owns 20 shares and Vikki owns 30 shares in Good Company, and there are five members of the board of directors. Under which voting arrangement can Bob assure himself a board member that represents his interests?

Cumulative voting

What is the total return for a stock that currently sells for $50, just paid a $1.75 dividend, and has a constant growth rate of 8%?

R = D1/P0 + g R = 2/ 100 + 0.08 = 10%

The price of a share of common stock is equal to the present value of all ___________ future dividends.

Expected.

Preferred stock has preference over common stock in the:

Preferred stock differs from common stock because it has preference over common stock in the payment of dividends and in the distribution of corporation assets in the event of liquidation.