Which of the following formulas is appropriate to find the value of preferred stock with a fixed dividend?
A) Value of preferred stock = Annual Preferred Stock Dividend (1 + growth rate)/Market's Required Yield on Preferred Stock
B) Value of preferred stock = Annual Preferred Stock Dividend (1 + growth rate)/Market's Required Yield on Preferred Stock - growth rate
C) Value of preferred stock = Annual Preferred Stock Dividend/Market's Required Yield on Preferred Stock
D) Value of preferred stock = Annual Preferred Stock Dividend/Investor's Required Yield on Preferred Stock
Answer: C
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Indicate whether this statement is true or false.
Which of the following is/are true regarding a reverse stock split?
a. Firms reduce the number of outstanding shares by increasing the par value of the stock. b. Firms reduce the number of outstanding shares by canceling outstanding shares. c. A reverse stock split usually increases the market value per share in inverse proportion to the reverse split. d. Managers and governing boards might use reverse stock splits to keep the market price per share within some target trading range. e. all of the above