Name two patterns of cash flows for a share of common stock, Financial Management

Assignment Help:

Name two patterns of cash flows for a share of common stock. How does the market define the value of the most common cash flow pattern for common stock?

Cash flows for a share of common stock contain dividend payments and the price received for the eventual sale of the share.  Common stock valuation is complex by the fact that common stock dividends are hard to predict compared to the interest and principal payments on a bond, or dividends on preferred stock. Certainly, corporations may pay common stock dividends not regularly, or not pay dividends at all.

Since with bonds and preferred stock, the market values common stock by estimating the current value of the expected future cash flows from the common stock.


Related Discussions:- Name two patterns of cash flows for a share of common stock

Debentures, A 16% debenture of R5 000 is redeemable at a premium of 10% aft...

A 16% debenture of R5 000 is redeemable at a premium of 10% after 5 years. The fair rate of return on similar debentures is 14% before tax. Calculate the present value of the capit

Advantages and disadvantages of investing in gilts, Advantages and Disadvan...

Advantages and Disadvantages of Investing in Gilts Advantages As the security is issued by the GOI, it has a minimal default risk. Investors have the opportunity to inves

price of the bond be if it is downgraded, Andrew Industries is contemplati...

Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1000. Andrew believes it can get a rating of A from

What are government intervention in chromex plc, Government intervention ...

Government intervention The government might look for intervene in the take-over bid because of fears that the market share of the combined group would constitute a monopoly wh

Transfer price, The price charged when one segment of an organization provi...

The price charged when one segment of an organization provides goods or services to another segment of the organization.

Decision making, Write a report to the Board of Directors of Solvent Ltd to...

Write a report to the Board of Directors of Solvent Ltd to analyse the performance of companies X and Y and to give recommendation as which of those two investment opportunities is

Find the minimum earnings, Milan Corporation is interested in buying a mach...

Milan Corporation is interested in buying a machine that will cost $50,000, and it will depreciate it on straight-line basis over a 5-year period. The machine is expected to last f

Compute the interest, (a) These are merely the differences of the two pric...

(a) These are merely the differences of the two prices. Consequently the mark to market losses are given by { Q 1 - Q 0 ,Q 2 - Q 0 ,Q 3 - Q 0 ,Q 4 - Q

What do you understand by swap, Question 1 Swap is an agreement among t...

Question 1 Swap is an agreement among two or more parties to exchange sets of cash flows over a period in future and What do you understand by swap? Describe its features, kind

What is abc analysis, Q. What is ABC Analysis? ABC Analysis: - ABC Anal...

Q. What is ABC Analysis? ABC Analysis: - ABC Analysis is a method of controlling different items of inventory. Generally a firm has to maintain several different items as inven

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd