29 Jun Question Q#1. According to the Wall St
Question
Q#1. According to the Wall Street Journal (WSJ), there was a wide-spread speculation in February 2013 that Apple, Inc. (AAPL) would announce a 2-for-1 stock split soon. Some of Apple’s large stock holders as well as some analysts and traders believe that a 2-for-1 stock split would definitely benefit its current shareholders and raise the firm’s overall market value. You read in chapter 14 that a 2:1 split would double the number of outstanding shares and half the earnings and dividends per share, thereby lowering the stock price. From a purely technical perspective, a 2:1 stock split simply provides additional pieces of paper and should not affect the overall wealth of shareholders (shares doubles, prices drop one-half). So you are puzzled why some shareholders, traders, and analysts adamantly believe that a 2:1 split will benefit Apple’s shareholders. Please explain concisely whether or not a 2:1 split would benefit Apple’s current shareholders with at least a 2-year investment (holding) horizon. You would want to use your understanding of chapter 14 stock split material, especially the signalling aspects of stock splits, optimal stock price range theory, past empirical evidence, and round lot stock purchase arguments, in your explanation. Limit your answers to no more than ten (10) sentences.
Q#2. After the severe 2008 stock market crash, an increasing number of publicly traded firms announced stock buyback (repurchase) programs. Please explain what benefits or rationale, if any, firms see in stock repurchases when their prices are down and how would investors react to these repurchase programs. You would want to use your understanding of chapter 14 stock repurchase discussion in your answers. Limit your answers to no more than ten (10) sentences.
Q#3. The M& M capital structure theories in chapters 15 and 26 persuasively argue that the optimal debt is not a 0.0 % debt to equity ratio (i.e., no debt). Table 15-1 (page 603 of text) shows that, consistent with M&M theories, the average long-run debt to equity ratio in many different industries ranges from 23% to 177%. Yet some technology firms, such as Microsoft, Google, and Apple, do not use any long-term debt or almost 0.0% LT debt. Please explain whether it makes financial sense for such firms to use no debt. You would want to use your understanding of capital structure material in chapter 15, especially signalling and asymmetric information theories, in your answers. Limit your answers to no more than ten (10) sentences.
Q#4. Finance research has shown that managers of actually managed mutual funds or exchange traded funds (ETF), on average, do not outperform the overall stock market as measured by the S&P 500 index (Page 293 of your book). In some years, more than 80% of fund managers were unable to beat the overall stock market. The year 2013 is a good example when the S&P 500 yielded nearly 29% return, which was better than the average return on all actively managed stock portfolios with similar risk. (a) If you believe these results which seem to support informational efficiency of equity markets in U.S., what would be your investment strategy so that your average long-run returns are better than the returns realized by more than 50% of professional money managers of actively traded funds. Explain. (b) If equity markets are efficient and rational to a larger extent, how would you explain the stock market bubbles of 2000 and 2008 in the presence of efficient markets. Please limit your answers to no more than twenty (20) sentences.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.