3578 words - 15 pages
United States Tax Cases (1913-1999), [97-2 USTC ¶50,905], U.S. District Court, Dist. Ore., Dennis R. Maze and Beatrice V. Maze, husband and wife, Plaintiffs v. United States of America, Defendant , Summary judgment: Genuine issues of material fact: Capital gains and losses: Small business stock:, (Oct. 10, 1997), (Oct. 10, 1997)
[97-2 USTC ¶50,905] Dennis R. Maze and Beatrice V. Maze, husband and wife, Plaintiffs v. United States of America, Defendant
U.S. District Court, Dist. Ore., Civ. 96-1000-JE, 10/10/97
[Code Secs. 1244 and 7402 ]
Summary judgment: Genuine issues of material fact: Capital gains and losses: Small business stock: Evidence.--The government was denied summary
912 words - 4 pages
STOCKS & MARKETS
Failure by regulators and exchanges to pinpoint what caused wild equities swings on May 6 might sap investor confidence in the stock market
As if individual investors lacked reasons to mistrust the stock market, along came May 6's gut-wrenching, 9.2 percent drop in the Dow Jones industrial average.
The rapid stock plunge — followed by an equally quick, partial rebound in which the Dow regained nearly half its losses — surprised retail investors. Days later, they are trying to digest the realization that the market action during the so-called "flash crash" has bewildered the pros, too.
"I still haven't heard a satisfactory answer as to what happened
3260 words - 14 pages
APPLICATION OF ARIMA MODEL FOR TESTING
“SERIAL INDEPENDENCE” OF STOCK PRICES AT THE HSEC
Cao Hao Thi – Pham Phu – Pham Ngoc Thuy
School of Industrial Management
HoChiMinh City University of Technology
The paper is an attempt to test the “serial independence” of stock prices at HoChiMinh City Stock Exchange Center (HSEC) in Vietnam by applying the ARIMA model for preliminary assessment in terms of its market efficiency. From findings derived, it appears to be that: (a) ARIMA model could be applied for testing the serial independence of stock prices at the HSEC; (b) It is failed to prove that the HSEC market is not a weak-form efficient one; and (c) the
1798 words - 8 pages
HONEYWELL INTERNATIONAL, INC. (HON)
FI560 Securities Analysis
Professor: Alan McKnight
By: Kecia Zuber
Mark C. Honeywell's Signature on Certificate
What segments of a business should potential investors look into before making a decision to purchase stock or not to purchase stock? Should investors look into companies whose brand in familiar to consumers? How important is it for companies to reinvest profits back into the business as opposed to paying out dividends to shareholders? Honeywell International, Inc. (HON), is a very well know company that takes pride in being one of the top industry leaders in Aerospace & Defense
3249 words - 13 pages
There is a connection between the stock market and the economy. It is noticeable how economic activity influences stock prices. The current state of the economy has major influence over how much money is being deposited into the economy as well as a consumer's confidence in their income. Whether an individual invests in the stock market or not, it will have an impact on everybody and every company. Every investor’s goal is to gain the most money from the stock market. To do so, much knowledge is needed which can help predict the outcome. There are techniques used by forecasters to predict whether the stock will go up or down. However, it will not be an exact approximation because no one
559 words - 3 pages
Diversification in Stock Portfolios
Assignment # 3
Dr. James Glenn
May 15, 2011
Financial Management- FIN 534-5016
The expected return on stocks is established as the computation for the return of a security based on the average pay off expected where as the volatility of stocks is the standard deviation of a return. The relationship between risk and return is examined by historical data for publicly traded securities. As investors in the stock market we learn that stocks are riskier investments than bonds, but they also have earned higher average returns. By holding a portfolio containing different investment, investors can
581 words - 3 pages
Why Did We Buy The Stocks We Selected?Being a fan of the music industry, our group decided to roll the die with one of the heavier music producers. We decided to choose Apple because of the recent success and popularity we have seen in the iPod as well as the new G5. We simply thought that the recent success of these two items would propel the stock in a positive direction. We chose HOT because we thought that the holiday season would bring in many travelers. Hotels would naturally have better business as more people travel across the world. Having ties to Sheraton and many other major luxury hotels we figured that HOT may have a chance to raise in value as the holiday season continues.What
4247 words - 17 pages
importance. Changes in CPI are used to assess price changes associated with the cost of living.
CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation.
â¢ Money supply
The money supply or money stock is the total amount of monetary assets available in an economy at a specific time. Money supply data are recorded and published, usually by the government or the central bank of the country. Public and private sector analysts have long monitored changes in money supply
2288 words - 10 pages
Accounting for Stock Options
John C. Rogers
BUS 650 Managerial Finance
August 6, 2012
Accounting for Stock Options
“Accounting for stock options has been one of the most controversial topics in accounting during the last decade. The principal debate is whether compensation expense should be recognized for stock options and, if so, the periods over which it should be allocated” (Apostolou & Crumbley, 2004, p. 30). The two methods used to calculate the expense regarding stock options are the "intrinsic value" method and the "fair-value" method. Only the fair-value method is currently as part of generally accepted accounting principles. Businesses act to gain
4043 words - 17 pages
On the Relationship between stock return and exchange rate: evidence on China
Yaqiong Li a b , Lihong Huang b
The Business School, Loughborough University ,UK
College of Mathematics and Econometrics, Hunan University, Changsha ,Hunan ,China
Abstract The purpose of this paper is to investigate the relationship between RMB exchange rate and A-share stock returns in China, in particular in Shanghai stock market. We find that both stock returns and RMB nominal exchange rate are integrated of order 1. The Engle–Granger cointegration test is then performed, suggesting that there is not a long-run equilibrium relationship between stock returns and RMB exchange rates at 5
2436 words - 10 pages
The beginning of the history of the stock companies in Saudi Arabia due to the thirties, with the founding of the first joint stock company in Saudi Arabia in 1934, the Arab Company for cars, and in 1954 was the establishment of the Arab Cement Company followed by three power companies. And follow up after the founding of several companies keep pace with other contributors to the initial requirements for the economic development of that stage.
Can be identified by the onset of the stock market in the UK at the end of the seventies, when the growing number of companies contributing significantly. The Government then merges companies in the electricity companies, which led to
586 words - 3 pages
Free Will vs. Determinism
Socrates: “What is the definition of determinism?”
Maria: “It, the theory or doctrine that acts of will and occurrences in nature or social or psychological phenomena are usually caused by preceding events or natural laws?
Socrates: “What is the definition of free will?”
Maria: “Free will is a voluntary choice or decision, freedom of humans to make choices that are not determined by prior causes or divine intervention, humanity has the freedom of choice, since our choices are ours in the first place, although they must have an explanation.”
Socrates: “Do you agree that every event has an explanatory cause?”
Maria: “Yes I would like to think that
659 words - 3 pages
The stock market crash of 1929 played an important role in our nation's history. After the crash, United States turned to a great depression from its greatest period of prosperity. There are differences and similarities between the stock market of 1929 and the stock market of 2006.Unlike the stock market today, the government had no control over the market in 1929.§There were no laws to guide the market in 1929. As a result, the large investors ruled the market to increase their wealth.§Unethical activities, like insider trading, emerged in the stock market of 1929.§The government regulates stock market today. The Securities and Exchange Commission was established to punish
559 words - 3 pages
Identify the components of a stock's realized return.
The two main components of a realized return or two sources are the dividend and the change of price
during the period, in other words if you buy stock for x amount of money, at a later time all the
money that you have received is your return realized and is the real cash flow of the stock realized
return ,also in a different view on the realized return components , Problem ,Plan Execute ,Evaluate .
Contrast systematic and unsystematic risk.
On this is a very simple meaning a stock is purchase some of this are well plan in the monetary gain to
have during a period of time and
3975 words - 16 pages
PROPOSED RESEARCH TITLE:
AN INVESTIGATION INTO THE DOWNWARD TREND IN GLOBAL STOCK MARKETS: A CASE STUDY OF THE NIGERIAN STOCK MARKET
The history of stock trading and trading associations can be traced as far back as the 11th century when Jewish and Muslim merchants set up trade associations. After centuries of evolution, stock markets have become the symbol of commerce in the modern world. It operates in various countries and trades a range of securities. The world stock market capitalisation is estimated to be about $ 36.6 Trillion. The stock market has various functions such as capital mobilisation, investing opportunities, risk
863 words - 4 pages
Microsoft Corporation (MSFT)
Microsoft Corporation develops, licenses, and supports software products and services; and designs and sells hardware worldwide. The company’s Windows & Windows Live division offers PC operating system that primarily includes Windows 7 operating system, Windows live suite of applications and Web services, and PC hardware products. Its Server and Tools division provides Windows Server operating systems, Windows Azure; Microsoft SQL Server, SQL Azure, Windows Intune, Windows Embedded, Visual Studio, Silverlight, system center products, Microsoft consulting services, and Premier product support services. This division also offers cloud-based services; and
322 words - 2 pages
(a) Dependable law and regulationsThe existence of dependable laws and regulations, not only from the government but also from the enterprises themselves is a necessary conditions since these all the organizations to compete and cooperate with the oversea and worldwide companies.(b) Resolution of policy riskInvestor confidence in reliable property right and stable, market-oriented policies are a necessary condition for financial integration and the development of emerging stock markets. Announced market-oriented policies may be reversed, however, and are initially not fully credible. We argue that sustained privatization and liberalization programmes represent a major test of political
602 words - 3 pages
The six forms of deferred (stock) compensation include: Incentive stock options, Non-statutory stock options, Restricted stock, Phantom stock plans, Discount stock options, and Stock appreciation rights.
* Incentive stock options entitle executives to purchase their companies’ stock in the future at a predetermined price.
* Compared to incentive stock options, non-statutory stock options do not qualify for favorable tax treatment. Executives’ pay income taxes on the difference between the discounted price and the stock’s fair market value at the time of the stock grant.
* Restricted Stock means that executives do not have any ownership control over the disposition of the
1144 words - 5 pages
Chapter 15 – Homework Week 4
E15-2 Recording the Issuance of Common and Preferred Stock –
Kathleen Battle Corp.
Journal entries to record given transaction are listed below:
1/10 Cash (80,000 x $5) $400,000
Common Stock (80,000 x $1) $ 80,000
Paid-in Capital in Excess of Stated Value –
Common Stock (80,000 x $4) $320,000
3/01 Cash (5,000 x $108) $540,000
Preferred Stock (5,000 x $100) $500,000
Paid-in Capital in Excess of Par Value –
Preferred Stock (5,000 x $8) $ 40,000
4/01 Land $ 80,000
Common Stock (24,000 x $1) $ 24,000
Paid-in Capital in Excess of Stated Value –
Common Stock ($80,000 - $24,000) $ 64,000
1040 words - 5 pages
Team members must hold at least three meetings to discuss the joint project, and you are required to record collective activities and individual activities as detailed as possible in your logbook. For individual activities, they must be endorsed by the other member. No free-riding for the group project is allowed. I reserve the right to read your logbook to identify each member’s contribution to the group work.
After reading this article “How does the stock market affect the economy?” it is obvious that the main topic of this article is about the stock market and how it affects companies and households. There are two main ideas of the article which I will summarize in this paragraph
1006 words - 5 pages
1. When shares of common stock are issued to satisfy the exercise of employee stock options, are the shares issued from the Company’s “authorized but previously unissued shares” or from the Company’s “treasury stock”? Where in the financial statements do you find this information?
(page 44) According to the 10-K, the Company’s common stock remains the same in 2011 and 2010 (75.5 million) while the treasury stock increased from 2615.2 to 3210.3 million, which means the Company didn’t issue any “authorized but previously unissued shares” this year but satisfied the exercise of employee stock options by using the treasury stock they bought in fiscal year 2011.
2. Based on the
561 words - 3 pages
A absolute Chinese stock market speculate theory
To be an investor especially a speculator who must know how to compete with others, we should both deal with hundreds of operation every year, in market coupled with thousands of up to date news everyday and compete with other speculators which makes market like a game. The reason why Chinese speculators call it as chips theory, is partly in response to serious market manipulation that market is more like a casino ,partly because game theory foundation. Along with security price fluctuate in secondary market, different trading volume appears in different price section which is formed to different buying cost region on one stock
545 words - 3 pages
1. "As owners, what rights and advantages do shareholders obtain" (Cornett, Adair, & Nofsinger, 2014, p. 203)?
They are able to participate in the economic growth of publicly traded firms without having to manage business entities directly. They have the right to residual cash flows of corporate profits and often receive some of these cash flows through dividends. In addition, shareholders vote on the members for board of directors and other proposals for the company. Shareholder capital losses are capped in that they can only lose their initial investment. Stocks are very liquid and investors can enjoy this liquidity in both their entrance into the stock market
846 words - 4 pages
Debt and Equity Instruments
Understanding the different debt and equity instruments gives managers the ability to make more accurate decisions that will help develop greater business prospects and opportunities. The cost of capital is what companies use to decide how they can increase money through borrowing or investing in stock. It is the required return that is crucial in making a budgeting project worth doing. Both the cost of debt and the cost of equity are what comprise the cost of capital. Costs are related to preferred stocks, common stocks and financial capital. These all play an important factor and can decide the success or failure of the company. These costs supply
3739 words - 15 pages
Assignment on The Potential of Indian Stock Market to be of the top among Global market
Submitted by Submitted to
Irshad Hussain Mrs. Navleen Kaur
Enroll no . A1802009459
Sec - C
Amity international Business School
Indian Stock Market
The Indian stock exchanges hold a place of prominence not only in Asia but also at the global stage. The Bombay Stock Exchange (BSE) is one of the oldest exchanges across the world, while the National Stock Exchange (NSE) is among the best in terms of sophistication and advancement of technology. The Indian stock market scene really picked up after the opening up of the economy in the early nineties. The whole of
545 words - 3 pages
Task 2: Evaluating Competitor’s Stock
AirJet Best Parts, Inc. is concerned regarding recent changes in its stock prices for the company and would like to determine the stock prices for key competitors. Key competitors include Raytheon, Boeing, Lockheed Martin, and the Northrop Grumman Corporation.
1. Using the dividend growth model and assuming a dividend growth rate of 5%, what is the rate of return for one of three key competitors? Use Yahoo Finance to obtain the latest dividend amount and price for one selected company. (15 pts)
Lockheed Martin Corporation
Rate of Return
4*(1+.05)/85.21 + .05
595 words - 3 pages
Homework Assignment: Week 4
Constant Growth Valuation
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm’s stock?
P=d1(R-G) = 1.5/(8% [15-7]). The value is 18.75.
Preferred Stock Valuation
Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock’s required rate of return?
r=5/50. The required rate of return should be 10
540 words - 3 pages
Upon analysis of the Seagate Technologies case, the arbitrage opportunity exists in the fact that Seagate’s stock price is undervalued. An investor would purchase the Seagate stock, sell on the market at the fair value, and collect profit. As this arbitrage opportunity is recognized, other investors (or MBA students) would also purchase Seagate stock (regardless of the fact that they invest in Seagate with their own capital or borrowed from the bank, since these is an arbitrage opportunity, there will be profit realized) , the price of the stock would eventually rise to fair value, eliminating the arbitrage opportunity.
The reason Seagate stock was undervalued was due to lack of
922 words - 4 pages
segment | $71B: Telecom: $39BWireless: $28B | $27.3BBusiness Mkt: $14.1BMass Market: $6.4BInternational: $3.9B |
Bond Rating | B+ | A+ | B |
Table 1: Company Summary
M&A Offers and Premium
In February 2005, Verizon and Qwest presented their final bids as described below
Verizon’s offer: $23.5 per share of MCI stock, $8.75 in cash and $14.75 in Verizon stock; This results in a valuation of $7.6B; Minimum stock exchange ratio will be 0.4062 shares of Verizon stock for each share of MCI. Verizon’s offer is a 1.18% discount (including synergies). MCI stockholders are bound lose value of their share if they accept Verizon’s offer.
Qwest’s offer: $26 per share of MCI stock, $10.50 per share
1024 words - 5 pages
term deposits give you a big return from the money you invested after waiting a long period of time? If you are a type of person that can accept a higher risk, you can invest your money in a stock market. In the financial market, stock refers to a supply of money that a company has raised. It comes from people who have given the company money in the hope that the company will make their money grow. The shares of stock are bought and sold in the stock market. The goal is to buy the stock at a low point, hold it for a time, and then sell the stock at a high point. The stock market investors include some of the richest people in the world. Bill Gates, the chairman of Microsoft, and Warren
820 words - 4 pages
Characteristics of a Corporation
A corporation is a legal entity, meaning it is a separate entity from its owners who are called stockholders. A corporation is treated as a “person” with most of the rights and obligations of a real person. A corporation is not allowed to hold public office or vote, but it does pay income taxes. It may be established as a profit making or nonprofit organization and may be publicly or privately held. The stock of a public company is traded on a stock exchange. There may be thousands, even millions, of stockholders in a public company. Stock of a privately held company is not traded on an exchange and there are usually only a small number of stockholders
1849 words - 8 pages
Running Head: ARE YOU AN INVESTMENT ANALYST?
PepsiCo and Coca Cola
ACC 557/Financial Accounting
March 02, 2014
Many organizations in the world have to share in the market. These organizations need to have a competitive advantage in the market. The discussions in this paper will include two organizations, about their descriptions, stock prices due to events, and stock analysis for both organizations. The name of the organizations this paper will mention will be PepsiCo and Coca Cola. These organizations are part of the beverage industry and provide several different food products for
1229 words - 5 pages
derivative market to act as a protective strategy in case of stock prices moving down as the investor can sell the asset at a formally agreed price and also for speculation purposes. A put option will be in-the-money (ITM), if its strike price is higher than the price of the underlying asset in the market. A put option is out-of-the –money (OTM) if its strike price is lowers than that of the underlying asset. A put option is at-the-money (ATM) if its strike price is the same or near the price of the underlying asset.
From the graph, the relation between the put price and volatility is linear, that is the two changes directly proportionally, if one increases, the other increases and the
1157 words - 5 pages
By: Bahae eddine Boussouf Nadezda Vovk
1) Common stock: a share of ownership in the corporation, which confers rights to any common dividends as well as rights to vote on election of directors, mergers, or other major events. Preferred stock: A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights. Preferred and common stocks are different in two key aspects. First, preferred stockholders have a greater claim to a company's assets and earnings. This
1184 words - 5 pages
preferred stock = 5%
$ 525 m common equity = 35%
ttl current asset = $ 1.5b
According to SEC, the holding company can have a long term debt fro 45% to 65%
- adding 37m in debt by issuing long term bonds will result to
$937 m long term debt = 61%
$75 m preferred stock = 5%
$ 525 m common equity = 34%
- still within the acceptable range of SEC
3) Ripe and Fresh Canning Company - Factoring
(Selling of the Firms Accounts Receivable)
- Converting invoices to cash - instead of them having to collect cash after 60-day
1126 words - 5 pages
shareholders and enables the old stockholder to maintain control.
1. The value of any stock is the PV (present value) of its expected dividend stream:
2. Constant Growth stock:
* A stock whose dividends are expected at a constant rate in foreseeable future is called constant growth stock.
* Many established firms, which tend to grow at the same or constant rate that are expected to grow steadily, are valued by constant growth valuation model.
* For constant growth stock:
With this regular dividend pattern, the general stock valuation model can be simplified to the following very important equation a/k/a “Gordon Model”:
3. The most important condition must be satisfied
2654 words - 11 pages
“To provide long-term capital appreciation” is the investment objective of The Keller All-Star Growth Fund. To achieve this objective, The Keller Fund strives to explore new strategies that could help improve its fund’s performance.
At a recent board meeting, a proposal to initiate option trading strategies was being considered. The proponent suggested that intelligent trading in options on a regular basis might be able to improve the fund’s returns, while possibly lowering its volatility.
The fund’s charter permitted different investment strategies which consists of buying the stock of a listed company, buying a call option on a listed stock, writing a call
3659 words - 15 pages
Chapter 11: Reporting and Interpreting Stockholders’ Equity
* Corporate Ownership
* Shares of stock can be purchased in small amounts.
* Ownership interests are transferable.
* Stockholders are not liable for the corporation’s debts
* Common stock – the basic voting stock issued by a corporation to stockholders.
* Voting rights
* Residual claim – if the company ceases operations, stockholders share in any assets remaining after creditors have been paid.
* Preemptive Rights – existing stockholders may be given the first chance to buy newly issued stock before it is offered to others.
* Equity vs. Debt
611 words - 3 pages
represents a financial claim, this can be stock ownership or a debt agreement. The securities markets allow businesses and individual investors to trade the securities issued by public corporations.
• Stock – Also known as a share. There is common stock and preferred stock, both also known as equity securities. Both common and preferred stock options in a corporation provided voting rights, a share to the company’s success in dividends, and any capital appreciation in the value of the security. The difference between preferred stock and common stock lies when the share holder will get paid. A preferred stock holder will be paid before a common stock holder.
• Bond –is a debt security that has a
599 words - 3 pages
Project # 2
Evaluating a Corporate Stock
I decided on Verizon for this project, I am a Verizon customer I thought they would be a good choice to learn about.
1. Note the full name and headquarters address of the company.
Verizon Communications Inc.
140 West Street
New York, NY 10007
2. Indicate which stock exchange its stock is traded on.
New York Stock Exchange (NYSE)
3. Indicate its stock trading symbol
4. State what kind of products or services it produces or provides.
• Customer premises equipment design and maintenance
• Data center outsourcing
• Hosted messaging
2278 words - 10 pages
contributing towards your problem of stock control. Also included are recommendations for improvement in these areas that we feel will significantly reduce stock loss. We would appreciate any feedback if you choose to implement any of the solutions put forward in the report.
Once again thank you for your dedication and hard work, it has been a pleasure to work with someone so enthusiastic and has made the whole project an enjoyable experience. If there is any further information you require please do not hesitate to contact us.
Michael, Peter, Geoff & Laura.
Business Description Summary:
The business consists of the original bottle shop which has a
1150 words - 5 pages
Hospital Glove Simulation
The simulation is broken down in four scenarios and provides guidance through the inventory management system of the Elms Valley SurgiCare Center (EVSC). It helps visualize how lot sizes, cycle service level, and safety stock impact inventory cost. The simulation also demonstrates how an accurate demand forecast helps to make the right inventory decisions.
Elms Valley SurgiCare Center (EVSC) is a hospital with capacity of 600 beds and serves nearly one million residents of Elm Valley. The Infection Prevention Committee issued new strict rules for the hospital to follow. The committee was concerned about people allergic to latex protein and mandated
762 words - 4 pages
following questions and offer a final recommendation to Coogly. Make sure you support your answers and clearly explain the advantages and disadvantages of utilizing the weighted average cost of capital methodology. Include at least one graph or chart in your presentation.
The capital structure for the firm will be maintained and is now 10% preferred stock, 30% debt, and 60% new common stock. No retained earnings are available. The marginal tax rate for the firm is 40%.
a) Coogly has outstanding preferred stock That pays a dividend of $4 per share and sells for $82 per share, with a floatation cost of $6 per share. What is the component cost for Coogly's preferred stock
5560 words - 23 pages
Volume–VII, Number–02, July-December, 2012
Effects of Interest Rate and Exchange Rate on Volatility of Market Index at Dhaka Stock Exchange
DEWAN MUKTADIR-AL-MUKIT * ABSTRACT The paper investigates the effects of the exchange rates and interest rates on stock market performance by using monthly time series data for the economy of Bangladesh, over the period of 1997 to 2010. This study uses econometric techniques of measuring the long and short term relationship between variables using the concept of Cointegration and Error Correction Model and analysis of Variance Decomposition. Causal relationships have been investigated using Granger causality test. By employing Cointegration technique
2459 words - 10 pages
This paper will examine the relationship between the dividend policy and stock price volatility based on the previous studies. Dividend policy is referred as a direction to the dividend paid out. In practice, we can through three aspects to show how the dividend policy is important. Firstly, in term of the clientele effect, the transaction cost and tax of investor position can exert an influence on whether dividend policy gains are preferred which means that dividend policy will exert an important influence on investors’ behaviour. Secondly, according to the signaling effect, dividend paid is the mean by manager to signal the new information to investor. And thirdly on
531 words - 3 pages
include more stocks than this example because it normally takes more than 30 stocks (Statman, 1987) for a portfolio to be qualified as a well diversified portfolio.
Beta measures the systematic risk (non-diversifiable risk) of a stock. Mysterious as it may sound, it can be easily found out by regressing the stock’s monthly excess return (return in excess of risk free rate) on market monthly excess return according to the following model:
R_it-R_ft=α_i+β_i (R_mt-R_ft )+e_it
the dependent variable Y the independently variable X
R_it is the return of stock i on month t;
R_ft is the risk free return on month t, normally a 3-month treasury
1331 words - 6 pages
General Mills’ Acquisition of Pillsbury from Diageo PLC General Mills is a major manufacturer and marketer of consumer foods in US. On December 8, 2000 the management of General Mill purposed to acquire Pillsbury from Diageo in order to create more value from earning growth. This deal required General Mills to issue new common share to exchange for Pillsbury. If the deal was executed, Diageo would become the largest shareholder for General Mills with 33% share holding. This acquisition would lead Diageo to obtain 141 million shares of the General Mills’ common stock and $5.142 billion debt from Pillsbury. However, as General Mills would like to submit the proposed deal of $10.00 billion but
1159 words - 5 pages
Essay 10: Earnings per Share
Dividends or dividend requirements can either positively or negatively affect the computation of basic EPS. Basic EPS is calculated by subtracting preferred dividends from net income and dividing the result by the weighted-average of shares outstanding.(5) If preferred dividends are a larger amount it will result in a smaller EPS and vice versa. The treasury stock method of computing dilutive EPS assumes that the options or warrants are exercised at the beginning of the year (or the date of issue if later), and that the company uses the proceeds to purchase common stock for the treasury. If the exercise price is lower than the market price proceeds are