MGMT310_lecture13_14

MGMT310_lecture13_14 - Lectures 13 and 14 Lectures 13 and...

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ctures 13 and 14 Last time we discussed… Lectures 13 and 14 D i v    t 0 t t1 ED P 1E r Btw, I’ve posted ch8/ch12 relevant practice problems + solutions on Katalyst.
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Let’s talk about dividends Payment is at the discretion of the board. After the dividend has been declared, it becomes debt and can't be rescinded easily. Taxes Dividends cannot be declared as a business expense (paid out of after tax profits) Individuals must pay tax on dividends they receive. When a company receives dividends paid by another corporation, they are partially tax exempt to the recipient. Types Regular cash dividends: Most common type, usually paid quarterly Extra, Special, Liquidating Stock dividends: Similar to stock splits Timing Declaration date, Ex dividend date, date of record, date of payment
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Individuals’ dividend taxation in US (2003+)
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Disappearing dividends…
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% of newly listed firms w/ positive earnings
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Some typical features of common stock Voting rights: might be multiple classes of stock Shareholders elect corporate directors, who in turn set corproate policy and hire/fire senior management Staggered elections Proxy voting, Proxy fights Shareholders have right to vote on matters of importance (e.g., mergers) Share proportionately in any… Dividends paid Liquidation value Preemptive Right When new stock is issued, current shareholders have first dibs
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What is preferred stock? Looks a lot like debt Has precedence over common stock in the payment of dividends and in liquidation Usually no voting rights Might have a credit rating Might be callable. Stated Value Amount to be paid in the event of liquidation Cumulative vs. noncumulative dividends
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Securities markets Primary market The market in which new securities are originally sold to investors E.g., IPO’s & SEO’s (road show, bookbuilding), Private placement Secondary market The market in which previously issued securities trade among investors People who make secondary market run smoothly: Brokers Arranges securities transactions among investors Dealers / specialists / market makers / p / Stand ready to buy/sell securities, provide liquidity
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Snapshot from 2/22/2012 Bid – price at which you can sell the stock sk rice at which you can buy the stock Volume –# shares traded (daily volume reported) arket Cap arket value of equity Ask – price at which you can buy the stock Bid Ask spread –the difference between bid and ask prices Market Cap – market value of equity Market Depth –size of order that would move market price
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Bid – price at which you can sell the stock (equivalently, price at which dealer/market maker/specialist will purchase from you) Ask – price at which you can buy the stock (equivalently, price at which dealer/market ppose the bid/ask quotes remain constant through the next X days, and you observe maker/specialist will sell to you)
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MGMT310_lecture13_14 - Lectures 13 and 14 Lectures 13 and...

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