Question

If a corporation in a stock market is having high income and it has potential for...

If a corporation in a stock market is having high income and it has potential for growth and it’s srock price almost not changing too much but it doesn’t pay dividend for 2 years ? Is it good for investment or no? This inc’s stock is rising today and it is green.And what other factors to consider if investing in this inc. good or no?

Homework Answers

Answer #1

having high levels of income and still no dividiends clearly points out towards the intent of the management to engage in a very large development be it expansion ie setting up of a new factory/ expanding the existing one. This means that the profits that are earned today are retained and thus would be suggested as a buy as expansion usually is followed by even higher profits and higher returns . the profits will ultimately reach the shareholder sooner or later . As the stock price have not yet increased to its full potential it is the best time to buy the share and hold it  

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What does it mean if price of stock doesn’t change too much only few changes across...
What does it mean if price of stock doesn’t change too much only few changes across the year ?? Is that good for investment ?? Also what is an announcement of a stock’s corporation and if I found some in the stock market are they important when I want to comment about the slight change of stock’s price???
Rhodok Corporation has preferred stock outstanding. The stock has an 11% dividend rate. The stock’s market...
Rhodok Corporation has preferred stock outstanding. The stock has an 11% dividend rate. The stock’s market price is $80 per share, and its par value is $75. If new shares are issued, the firm will pay $2 per share in flotation costs. The corporate tax rate is 21% What is the company’s cost of preferred stock financing?
1. Stock Values Courageous, Inc. just paid a dividend of $1.80per share on its stock. The...
1. Stock Values Courageous, Inc. just paid a dividend of $1.80per share on its stock. The dividends are expected to grow at a constant rate of 3 percent per year, indefinitely. If investors require a 12 percent return on Courageous stock, what is the current price? What will the price be in 3 years? In 15 years? PART A: Current Price: $____________. PART B: Price in Three Years: $____________. PART C: Price in Fifteen Years: $____________. #4 Stock Values The...
On January 1, 2020, Jordan Inc. purchased 25% of the outstanding common stock of Melody Corporation...
On January 1, 2020, Jordan Inc. purchased 25% of the outstanding common stock of Melody Corporation at a cost of $450,000. Melody Corporation had 400,000 shares of common stock outstanding. At the date of purchase, the book value of Melody’s net assets was $1,500,000. Book value and fair value of net assets were the same for all balance sheet items except for machinery and inventory. The fair value exceeded the book value by $100,000 for machinery and $20,000 for the...
An investor is considering purchasing one of the following three stocks. Stock X has a market...
An investor is considering purchasing one of the following three stocks. Stock X has a market capitalization of $8 ​billion, pays a relatively high dividend with little increase in​ earnings, and has a​ P/E ratio of 12. Stock Y has a market capitalization of $62 billion but does not currently pay a dividend. Stock Y has a​ P/E ratio of 37. Stock​ Z, a housing industry​ company, has a market capitalization of $801 million and a​ P/E of 19. a....
The Jackson Company has just paid a dividend of $3.00 per share on its common stock,...
The Jackson Company has just paid a dividend of $3.00 per share on its common stock, and it expects this dividend to grow by 10 percent per year, indefinitely. The firm has a beta of 1.50; the risk-free rate is 10 percent; and the expected return on the market is 14 percent. The firm's investment bankers believe that new issues of common stock would have a flotation cost equal to 5 percent of the current market price. How much should...
1. What is the price of a share of preferred stock that has a dividend of...
1. What is the price of a share of preferred stock that has a dividend of $3 if the cost of preferred (rp) is 15% 2. What would you pay for a share of common stock if you expect the next dividend to be $3 and you expect to sell it in one year for $25, assuming the cost of equity (re) is 15%. 3. MBV is a cruise line which announced that dividends are expected to grow by 3.5...
Problem 7-13 Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is...
Problem 7-13 Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 80% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 6% per year. If...
Moss Corporation has a single class of common stock outstanding. Tanya owns 1,000 ​shares, which she...
Moss Corporation has a single class of common stock outstanding. Tanya owns 1,000 ​shares, which she purchased five years ago for $ 140,000. Moss declares a stock dividend payable in 8​% preferred stock having a $ 100 par value. Each shareholder receives one share of preferred stock for ten shares of common stock. On the distribution December 16 of the current yearlong the common stock was worth $ 190 per​ share, and the preferred stock was worth $ 100 per...
1. Biogenetics Corporation has a target capital structure of 60 % common stock and the rest...
1. Biogenetics Corporation has a target capital structure of 60 % common stock and the rest on bonds. The risk-free rate is 5%, and the return on the stock market is 15%. This year, Biogenetics bonds had a YTM of 5.5%, and the company is on the 35 percent tax bracket. On last trading day, Biogenetics paid dividends of $3/share , which will grow at 3% every year. Last trading day the stock was selling at $30. The company beta...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT