Is book value the excellent proxy to the value of shares
Is book value the excellent proxy to the value of the shares?
Expert
No. This would be a miracle when the number which appears in the Shareholders’ Equity had anything to do along with the value of the shares. While we have a look at the relation among the market value and the book value of all the Spanish companies into the continuous market, we enter at several conclusions:
a) In February 2005 and December 2006 where there was no company that market value equalled its book value;
b) The average in February 2005 was 4.1 and in December 2006 it was 4.6 and
c) There was just one company in December 2006 which market value was lower than its book value. If we repeat similar exercise for the companies involved in the S and P 500, we can see that, in February 2005 and in December 2006, there was no company whose market value equaled its book value; the average was 3.8 in 2005 as well as 4.5 in 2006.
Rusk Inc needs $50 million in new capital that it might obtain by selling bonds at par with coupon of 12% or by selling stock at $40 (net) per share. The current capital structure of Rusk consists of $300 million (face value) of 10% coupon bonds selling at 90 and 10 m
John Wong is a fresh graduate and has a limited amount of funds for investments. He expects that the Hong Kong stock market will fall soon but he is not familiar with derivatives. In order to gain more money to buy a car, he explores engaging in Hang Seng Index (HSI)
Problem 21-1 Valuation Harrison Corporation is interested in acquiring Van Buren Corporation. Assume t
Which data is the most suitable for finding betas?
What did ‘better’ mean specified with Markowitz questioned regarding portfolio selection?
When Markets are expected to be Volatile: For the bear and bull strategy to yield gains, it is essential that the trader takes a view on the direction of the market i.e. either bearish or bullish, and accordingly implement the strategic choice. More o
Cost of capital aspect: Estimation of WCR is beneficial from the point of view of cost of capital too. A sound working capital position is beneficial from the point of view of both owners and lenders of the company. A sufficiently positive position me
You work in Walt Disney Company’s corporate finance and treasury department and have just been assigned to the team estimating Disney’s WACC. You must estimate this WACC in preparation for a team meeting later today....?
What is the Capital Cash Flow?
What do you mean by Earnings management and what are their actions and activities?
18,76,764
1959451 Asked
3,689
Active Tutors
1413938
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!