FM Chapter 11 Questions – Sources of finance – equity
12 Comments
R
Ruthlyn·
100% boosted my confidence
J
Jose·
The questions help to boost confidence. They help us understand the topic better. 80%
F
fayaz21·
80% On the test wow
T
Tariq·
100% wow this has boosted my confidence ;)
K
Kay·
80% On the test
J
John MoffatTutor·
Great :-)
W
Waseem·
80% just revised the whole chapter once!!
3rd Question can anyone explain it to me???
J
John MoffatTutor·
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.
S
SOLANKAR·
80percent
A
annonymous·
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.
O
Oxana·
Have you got an answer? I am interested too to know if this is just another way for calculation ex-rigths per existing share?
J
John MoffatTutor·
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.)
3rd Question can anyone explain it to me???
I do explain this in the free lectures that go with this chapter of the lecture notes.
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.
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.)