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.
I need the answers for the midterm exam for FIN6000
A financial consultant obtains various valuations of my company when this discounts the Free Cash Flow (FCF) as opposed to when this uses the Equity Cash Flow. Is it correct?
Stock exchanges: A stock exchange provides services useful for trading, issue and redemption of shares and other securities for traders and brokers. They will also provide facility for payment of income and dividends for listed securities. Securities
The part of the net income which is not distributed to shareholders goes to reserves (to shareholders’ equity). As dividends shows real money, reserves are real money as well. Is it true?
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
When valuing the shares of my company, I calculate the present value of the expected cash flows to shareholders moreover I add to the result obtained cash holdings and liquid investment. Is that correct?
What is the Capital Cash Flow?
Explain how companies with substandard financial history can draw the attention of investors. Are investors irrational or naive?
Define the term Vanilla Bonds regarding Corporate Bonds?
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
18,76,764
1950586 Asked
3,689
Active Tutors
1451371
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!