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.
Which method must we use to valuate young companies along with high growth but uncertain futures? Two illustrations were Boston Chicken and Telepizza while they began.
AB Corporation has 16% cost of equity, 35% tax rate, and debt-to-equity ratio of 30%. XY Corporation has 30% tax rate and debt-to-equity ratio of 40%. Both AB and XY are in the same business of selling automotive parts. If the riskless rate is 4% and the expected retu
Explain the way of estimating an average.
a) The Australian firm sold a ship to a Swiss firm and gave the Swiss client an option of paying either AUS10,000 or SF15,000 in 9 months. (i) In above, the Australian firm efficiently gave the Swiss client a free option to buy up
What did ‘better’ mean specified with Markowitz questioned regarding portfolio selection?
HW I: Show your approach to each problem (formulas, variables, etc.) You can use Excel sheet formulas to show the work or use the Finance calculator terms. For the ABC answers: choose the correct answer and delete the rest.
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
How must we compute the beta and the risk premium?
Explain the branching structure of the binomial model.
You are an analyst in the financial division of Flipper Industries (FI) which has a beta of 1.80 (you are risk-philic, so you enjoy the thrill of working somewhere so risky). The company just paid a dividend of $1 and dividends are expected to grow at 5% per year. The
18,76,764
1945463 Asked
3,689
Active Tutors
1428686
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!