Chapter 08 Stock Valuation



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Essay Questions
 

98. What are the primary differences and similarities between NASDAQ and the NYSE? 


 


 

 

 



99. Using the dividend growth model, explain why a firm would be hesitant to reduce the growth rate of its dividends. 

 


 

 

 



100. Kelley wants to purchase shares in Classic Kars, Inc., but is torn between buying shares of common stock or shares of preferred stock. What should he consider before determining the type of share he should purchase? 

 


 

 

 



101. Explain why small shareholders should prefer cumulative voting over straight voting. 

 


 

 

 



102. Ted, a wealthy individual, plans to purchase 30 percent of a firm's Class A shares of outstanding stock. He believes that such a purchase will allow him to control the firm by electing his candidates to the board over time as current board member's terms expire. The firm has a cumulative voting process. What factors should Ted be considering and why to ensure he can gain the control he desires? 

 


 

 

 



103. Explain the primary change that occurred in the structure of the NYSE in 2006 and how that change affected the exchange members. 

 


 

 

 



 



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