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This is True or False 12. The Gordon stock valuation model, Po=D1/(r. - g), can be used for firms which have negative growth rates. 13.

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12. The Gordon stock valuation model, Po=D1/(r. - g), can be used for firms which have negative growth rates. 13. An "Initial Public Offering" (IPO) occurs whenever a company buys back its stock on the open market. 14. The pre-emptive right is a provision in the corporate charter which gives common stockholders the right to purchase (on a pro rata basis in proportion to the shares currently held) new issues of common stock issued by a corporation. _T_ 15. A big advantage of preferred stock is that preferred stock dividends are tax deductible for the issuing corporation 16. The dividend yield on a stock is equal to the expected total return on the stock less the expected capital gain 17. The most commonly used financing method for mature corporations is the issuance of new shares of common stock 18. Many firms use short-term bank loans as a short-term "shock absorber" when extra funding is needed

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