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FIN 072 | Financial Markets Student Activity Sheet Module #15 Name: _________________________________________________________________ Section: ____________ Schedule: ________________________________________ Class number: _______ Date: ________________ This document is the property of PHINMA EDUCATION Lesson Title: Graded Quiz 3 Lesson Objectives: At the end of this module, I should have: 1. Assessed the learnings on the topics covered Materials: Calculator, reviewer notebook, textbook References: Timbang, F. (2016). Financial Management Part 2 . Quezon City: C & E Publishing, Inc. Brigham, E. F., Houston, J. F., Hsu, J.- M., Kong, Y. K., & Bany-Ariffin, A. (2018). Essentials of Financial Management. Pasig City: Cengage Learning Asia Pte. Ltd. Productivity Tip: Take a few deep breaths when you get stuck If you come across a question that you are not sure how to answer in the exam, stop for a moment and take a few deep breathes (in for the count of 3 and out for the count of 3). If you are not sure how to answer it there and then, move on to another question. Answer Sheet: Strictly no erasures on your final answers. 1. 6. 11. 16. 21. 26. 2. 7. 12. 17. 22. 27. 3. 8. 13. 18. 23. 28. 4. 9. 14. 19. 24. 29. 5. 10. 15. 20. 25. 30. Part 1. True or False. If the statement is correct, write TRUE. If the statement is incorrect, write FALSE. 1. A proxy is a document giving one party the authority to act for another party, including the power to vote shares of common stock. Proxies can be important tools relating to control of firms.
FIN 072 | Financial Markets Student Activity Sheet Module #15 Name: _________________________________________________________________ Section: ____________ Schedule: ________________________________________ Class number: _______ Date: ________________ This document is the property of PHINMA EDUCATION 2. The preemptive right gives current stockholders the right to purchase, on a pro rata basis, any new shares issued by the firm. This right helps protect current stockholders against both dilution of control and dilution of value. 3. If a firm's stockholders are given the preemptive right, this means that stockholders have the right to call for a meeting to vote to replace the management. Without the preemptive right, dissident stockholders would have to seek a change in management through a proxy fight. 4. Classified stock differentiates various classes of common stock, and using it is one way companies can meet special needs such as when owners of a start-up firm need additional equity capital but don't want to relinquish voting control. 5. Founders' shares are a type of classified stock where the shares are owned by the firm's founders, and they generally have more votes per share than the other classes of common stock. 6. The total return on a share of stock refers to the dividend yield less any commissions paid when the stock is purchased and sold. 7. The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond. 8. According to the basic DCF stock valuation model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock.

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