Questions from Financial Management

Q: What does an investment banker do when underwriting a new security issue

What does an investment banker do when underwriting a new security issue for a corporation?

Q: How does a preemptive right protect the interests of existing stockholders?

How does a preemptive right protect the interests of existing stockholders?

Q: Explain why warrants are rarely exercised unless the time to maturity is

Explain why warrants are rarely exercised unless the time to maturity is small?

Q: Under what circumstances is a warrant’s value high? Explain.

Under what circumstances is a warrant’s value high? Explain.

Q: Explain how earnings available to common stockholders and common stock dividends paid

Explain how earnings available to common stockholders and common stock dividends paid from the current income statement affect the balance sheet item retained earnings.

Q: Explain the role of cash and of earnings when a corporation is

Explain the role of cash and of earnings when a corporation is deciding how much, if any, cash dividends to pay to common stockholders.

Q: Are there any legal factors that could restrict a corporation in its

Are there any legal factors that could restrict a corporation in its attempt to pay cash dividends to common stockholders? Explain.

Q: What are some of the factors that common stockholders consider when deciding

What are some of the factors that common stockholders consider when deciding how much, if any, cash dividends they desire from the corporation in which they have invested?

Q: What is the Modigliani and Miller theory of dividends? Explain.

What is the Modigliani and Miller theory of dividends? Explain.

Q: Explain the bird in the hand theory of cash dividends.

Explain the bird in the hand theory of cash dividends.