FM Chapter 11 Questions – Sources of finance – equity
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80% On the test wow
100% wow this has boosted my confidence 😉
80% On the test
Great 🙂
80% just revised the whole chapter once!!
3rd Question can anyone explain it to me???
If a company announces a lower dividend than shareholders were expecting then shareholders are likely to expect the company is doing badly whether or not that is the case.
I do explain this in the free lectures that go with this chapter of the lecture notes.
80percent
Dear John,
In question 2, the theoretical value per existing share, I calculated it as (share price before rights – TERP ), Therefore $3 – $2.65 = $0.35.
As you can see, I get the same answer with a shorter calculation.
Will this method work for all questions of this type, or was this just a coincidence?
Thank you in advance.
Have you got an answer? I am interested too to know if this is just another way for calculation ex-rigths per existing share?
Anonymous should have asked in the Ask the Tutor Forum, not as a comment on a lecture. I do not always see comments on lectures.
It is a coincidence. (And we never calculate ex-rights per existing share – it is meaningless. He was referring to the value of the rights per existing share.)