Answer:
Explanation:
a. On the basis of the conversion ratio and the price of the common shares, what is the current conversion value of each preferred share?
Conversion Value = No of Common Shares × Market Price Per Share
= 5 × $20
= $100
b. If the preferred shares are selling at $9696 each, should an investor convert the preferred shares to common shares?
Total Value of preferred Share = Share Price + Dividend Payment Per Share
= $9696 + $10
= $ 9706
Total Value of 5 Common Stock = ((Market Price of 1 Share + Dividend per Share) × 5)
= ((20 + 1) × 5)
= $ 105
No. The investor should not convert the preferred shares to common shares. This is because, the value of one preferred share exceeds the value of the converted common shares by $9601. Thus, based on the value of the converted and non-converted preferred share, the non-converted preferred share is more valuable than the converted one. Thus, the investor should not convert the preferred shares.
c. What factors might cause an investor not to convert from preferred to common stock?
If the value of the converted shares is lower than that of the original preferred share, it makes the conversion devalue an investor's overall investment value.
Additionally, if the investor is unwilling to have residual claim on profits. This is because common stockholders receive their dividends after debt and preference shareholders get their claims. Therefore, the preferred shareholder could see it best to retain their holdings as Preferred and not Common.
The first one is False and the second one is B
HOPE IT HALPS :DDDDDD
A dollar in the present day is worth less than that of the dollar in the future, because of returns generated over reinvestment.
<h3>What is reinvestment?</h3>
A process of investing something, which is invested more than once after generating returns over it, is known as a reinvestment. A currency is the most widely reinvested class of asset, and generally its value appreciates.
Hence, the significance of reinvestment is given above.
Learn more about reinvestment here:
brainly.com/question/17206010
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Answer:
Rocks are classified according to their mode of
formation or origin in three groups: Igneous,
Sedimentary and Metamorphic; and each group
contains in turn a wide variety of types of rock
which differ from each other by their composition and texture.
