Identify some actions that companies have taken to make takeovers
more difficult.
What is the preemptive right, and what are the two primary reasons
for its existence?
What are some reasons why a company might use classified stock?
Explain the following statement: “Whereas a bond contains a promise to pay interest, a share of common stock typically provides an expectation of, but no promise of, dividends plus capital gains.”
What are the two parts of most stocks’ expected total return?
If D1 $2.00, g 6%, and P 0 $40, what are the stock’s expected
dividend yield, capital gains yield, and total expected return for the
coming year?
Write out and explain the valuation formula for a constant growth
stock. Explain how the formula for a zero growth stock is related to that
for a constant growth stock. A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is r s 11%. What would the stock’s
price be if the growth rate were 5 percent? What would the price be
if g 0%?
