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Scrat [10]
3 years ago
6

The cash flows associated with common stock are more difficult to estimate than those related to bonds because the stock has a r

esidual claim against the company versus a contractual obligation for a bond. True or False?
Business
1 answer:
Dafna11 [192]3 years ago
5 0

Answer:

The answer is True.

Explanation:

Common stock holders is the firm's owner. Unless their voting rights is large enough, they will not have the power to demand certain dividend amount be paid out every year as it is at the firm's board of management authority. Moreover, common stock has perpetual lifetime which only ends when the company shut down and has residual claim against the company, thus, the recovery of initial investment in common stock is harder to estimate as it is usually the stock's price at exit time.

For bond, it is a contractual obligation, thus interest payment and face value repayment have been stated very clear in amount and in time and these payments are put into priority over common stock in the event of default.

You might be interested in
what is the estimate of walmart's long term growth assuming the constant growth period started in 2014 when the dividend per sha
Ksivusya [100]

The estimation  of Walmart's long term growth assuming the constant growth period started in 2014 when the dividend per share was $1.89 is $42.60 is the answer in % terms w/o the % sign.

The solution to the above mentioned equation is given below.

$42.60 is the answer in % terms w/o the % sign.

Given about Walmart's stock,

required return r = 7%

Growth rate g = 1.93%

Last dividend D0 = $2.12

So expected dividend in 2021 is D1 = D0*(1+g) = 2.12*1.93 = $2.16

So, Current stock price can be calculated using constant growth model,

Current stock price P0 = D1/(r-g) = 2.16/(0.07-0.0193) = $42.60

To learn more about Walmart's, visit here:

brainly.com/question/28299312

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6 0
1 year ago
Which task is the responsibility of middle management?
Temka [501]

Answer:

C. Evaluate and motivate workers

Explanation:

This is the taks for middle mamagement.

6 0
3 years ago
Dividends are equal to $5, and the current share price is $50. Dividends are expected to grow at 2% forever. According to the di
aleksley [76]

Answer:

Required rate of return = 12.2%

Explanation:

According to the dividend growth model the price of a stock is

D*(1+G)/R-G

D= dividend

G=growth

R= Required rate of return

In order to find the required rate of return we will put the values given to us in the question into the formula.

D=5

G=2%

Price = $50

50=5*(1+0.02)/R-0.02

50R-1=5.1

50R=5.1+1

50R=6.1

R=6.1/50

R=0.122=12.2%

3 0
4 years ago
One day, while Barbara was parking her car at the mall, she backed into another car. She got out of her car to see what happened
baherus [9]

Answer: Barbara should have left a note for the other driver and Barbara’s action is an example of a hit and run.

Explanation:

Hit and run occurs when there's a traffic collision with another car or human being and the person who caused the collision doesn't stop and therefore doesn't provide necessary information details which are required by law to the other person affected.

With regards to the scenario discussed in the question, Barbara should have left a note for the other driver and Barbara’s action is an example of a hit and run.

She should have left a note which will consist of details of how she can be reached in case there's further damage on the car.

6 0
3 years ago
Sometimes it is better to leave a task and come back later if you do not feel like doing it at the time
Allushta [10]
Yes i definitely agree
3 0
3 years ago
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