Which of the following is a disadvantage of share ownership? Select one: a. Shares are liquid (can be converted to cash quickly). b. Information is widely available in the news and financial media. c. Transaction costs are low. d. Valuation is difficult.
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Which of the following is a disadvantage of share ownership?
Shares are liquid (can be converted to cash quickly).
Information is widely available in the news and financial media.
Transaction costs are low.
Valuation is difficult.
Step by step
Solved in 3 steps
- Why holding too much capital may result in the lower the return to shareholders. Explain with some examples to make it easier to understand.One of the following decisions is not taken to increase the stock price: Select one: a. Maximize costs b. Attracting additional funds c. Maximize net income or profit d. Returning profits to owners over timeFinancial risk refers to the: Multiple Choice possibility that interest rates will increase. risk of owning equity securities. the risk that the share price may not reflect all known information general business risk of the firm. risk faced by equity holders of firms with debt.
- TB 13-80 Company X has a P/E ratio of 16 in year 2017. Company X has a P/E ratio of 16 in year 2017 and 16.5 in 2018. In 2018 its P/E ratio is 24. The best way to interpret these data is to conclude thatCompanies cannot as a general rule reduce the capital of the business. However, there may be a class of capital which can be redeemed. Explain the accounting treatment necessary in a redemption of share capital. Illustrate your answer with your own numerical example.A financial manager's goal of maximizing current or short-term earnings may not be appropriate because: Multiple Choice it considers the timing of the benefits. share ownership is widely dispersed. increased earnings may be accompanied by acceptably higher levels of risk. earnings are subjective, they can be defined in various ways such as accounting or economic earnings
- Which of the following is not a determinant of investment? a) The efficiency of capital equipment b) The level of consumer demand c) Interest rates d) The willingness of investors to buy new share issuesWhich of the following statements is not correct? Group of answer choices A)Purchasing fixed assets using cash decreases the current ratio. B)Accruing a commission expense will affect the net profit margin ratio. C)Increasing the financial leverage ratio guarantees the net profit margin ratio will increase. D)Purchasing treasury stock results in a decrease in the current ratio. E)All of the above are correctWhich of the following statements is incorrect? Select one: A. It is possible for markets to be efficient with respect to some information and inefficient with respect to other information B. It is possible for some markets to be more efficient than others C. The market is likely to be more efficient with respect to companies where there is greater analyst following D. The market is totally efficient with respect to companies providing regular dividends to investors
- The efficient market hypothesis says that Multiple Choice market prices reflect underlying asset values. individual investors should not participate in the financial markets. investors should expect to earn abnormal profits. financial managers can accurately time stock and bond sales. creative accounting can be used to inflate stock prices.1.Which of the following is not something that you would consider when evaluating the optimal capital structure? d. Security Rating. b. EBIT-EPS Analysis. a. Agency Costs. f. Neither the second nor fourth answer is correct. c. Taxes. e. All of the above are considered when determining the optimal capital structure. 2.Which of the following is an argument for the relevance of dividends? b. Reduction of uncertainty. a. Informational content. c. Some investors' preference for current income. d. All of the above. 3.All of the following are true of stock splits EXCEPT: a. Market price per share is reduced after the split. d. Proportional ownership is unchanged. b. The number of outstanding shares is increased. c. Retained earnings are changed.“The market capitalisation of a brand as reflected by their share price on the stock exchange is often far higher than the actual asset value of the company.” Dissect and evaluate this statement in relation to the difficulties encountered in valuing a company when trying to sell it.