ACCT-311 Lecture Notes - Lecture 8: Dividend Policy, Spot Contract, Economic Value Added
1 Apr 2016
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Document Summary
Discount on forward rate occurs when the forward exchange rate differs from the spot rate. This risk can be eliminated by proper diversification. Also known as company-specific risk 20 divestiture the opposite of an acquisition. There are two types of plans one involves only stock that is already outstanding, while the other involves newly issued stock. In the first type, the divi- dends of all participants are pooled and the stock is pur- chased on the open market. In the second type, the company issues new shares to the participants. Thus, the com- pany issues stock in lieu of the cash dividend 41 dividendyield definedaseithertheend-of-perioddiv- idend divided by the beginning- of-period price, or the ratio of the current dividend to the current price. Valuation formulas use the former definition 23 dual-class share sometimes created by a firm to meet special needs and circumstances.
