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1. www.chegg.com/homework-help/questions-and-answers/please-help-thumb-support-similar-type-question-1-wwwcheggcom-homework-help-questions-answ-q88182404

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Question 12

A company conducts the following capital payout and raising policies. Assume that there are no taxes, no signalling effects and no transaction costs.

Which one of the following statements is NOT correct?

a. 1 for 3 bonus issue will increase the number of shares by 33.33% and decrease the share price by 25%.

b. Cash dividends mean that shareholders receive money.

c. 1 for 6 rights issue at a subscription price of $2 when the pre-announcement stock price was $5, will increase the number of shares by 16.67% and decrease the share price by 8.57%.

d. 15% stock buy-back will decrease the number of shares by 15%.

e. 7 for 4 stock split will increase the number of shares by 57.14% and decrease the share price by 75%.

Question 07:

You expect market interest rates to increase, while the rest of the market believes there will be a decrease. Which of the following statements about fixed-coupon bonds is most correct?

a. You expect the company to increase the coupon payment in response to the increase in market rates.

b. You should invest in long-term bonds rather than short-term securities

c. Bond yields and prices are expected to rise

d. At the maturity date, regardless of changes in market interest rates, a bond price will be equal to the face value plus the coupon.

e.As the coupons are fixed, the interest rate change will have no impact on the bond.