Chapter 2 Flashcards
(39 cards)
Do ordinary shares have voting power?
yes
In case of liquidation in ordinary shares do they receive shares if so when?
Yes, they will be last to receive
Do ordinary shareholder’s get dividends?
yes, board
Do preference shares have voting rights?
No
Pereference shareholder’s get which type of dividend?
fix
In the case of liquidation (preference shares) get?
Residual value before ordinary shares
Types of preference shares include?
cumulative and non cumulative
Types of shares?
Non-voting
Redeemable shares
Dual Class
What is cost of equity?
Is the return which company pays theoritcally to thier shareholders in order to compensate the risk that they have taken
How to calculate Market Cap?
Share price * number of shares outstanding
How surplus is calculated?
Issue price - Nominal Value * number of shares
What is treasury stock?
Previously outstanding stock that is bought back from shareholder’s by issuer
Do treasury stock reduces equity?
Yes
PER?
P/EPS
EPS?
Annual earnings / number of shares
Dividend per share
Dividend / number of shares
Market value to book value ratio?
Market value / book value
How dividend pay out ratio is calculated?
= Dividends or dividends per share / Net income ( or earnings per share)
What is stock split?
divide your existing shares into multiple shares to boost the liquidity
When corporation does stock split what happens to it shares and market value? What happens to share price?
Shares increases but market cap stays the same. Share price goes down
What reverse stock split does to shares and it’s price?
decrease number of shares and increase it’s price
How book value per shares is calculated?
stockholder’s equity / number of shares
How to calculate PV of common stock?
PV = Expected dividend + Expected stock price / (1 + i) ^n
What is Ke?
Minimum rate of return required by shareholder’s
