S07Assg8soln

# S07Assg8soln - FIN 2200 CORPORATION FINANCE Sum 2007...

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FIN 2200 – CORPORATION FINANCE Sum 2007 Professors: A. Dua Assignment #8 key 1. Several weeks ago, the board of directors of Gordon Enterprises (GE) declared a dividend of \$3.25 per share. Shareholders of record will receive their dividend at noon 43 days from today. The effective rate of return per year for GE is 25%. Suppose it is 11:59:59 a.m. and the stock goes ex-dividend at noon today. By how much would the stock price drop (all else equal) at the instant the stock goes ex-dividend? (Give answer to 6 decimal places.) 165677 . 3 \$ (1.25) 3.25 dividend expected of PV drop Price 365 43 = = = 2. Canadian Amalgamated Corp. (CAC), a company registered in Ontario, has 750 million shares outstanding. There are 100 million shares held as treasury shares (note: these cannot be voted). There are 11 seats on the board of directors and cumulative voting is used. a) How many shares are issued? # shares issued = 750 million + 100 million = 850 million shares

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S07Assg8soln - FIN 2200 CORPORATION FINANCE Sum 2007...

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