Personal Finance Questions-- I need some help here, please!?

Question

Compare a regular cash dividend with a periodic share repurchase. Which has greater appeal to you? Explain.

Explain a stock dividend and further explain if you would prefer it to a cash dividend.

What are stock splits and how desirable are they?

I am not looking for homework help here!.. just explainations as i make some decisions.. .Thanks!

Compare a regular cash dividend with a periodic share repurchase. Which has greater appeal to you? Explain.
Explain a stock dividend and further explain if you would prefer it to a cash dividend.
What are stock splits and how desirable are they?

Answer 1

1. cash dividend: The company sends shareholders money on a per share basis. It is often a few percentage points a year.

2. Share repurchase: The company buys its own shares. This reduces the numbers of shares outstanding, which in turn, increases the remaining shareholders' percent ownership of the company. Repurchases are often done to keep stock option plans from diluting the outstanding stock.

3. Stock splits do not change a shareholder's wealth. Usually, a stock will split 2-to-1; in this situation, a shareholder who owns 1000 shares would then have 2000 shares. But each share would then have half the profits and half the dividends. It is a neutral action for existing shareholders.

4. A stock dividend is similar to a split. It is neutral to existing shareholders.

If I am a shareholder, I would like dividends. This is especially true if the company issued lots of options. An option is an intrument entitling the holder to purchase stock at a certain price. If a dividend is payed, the stock price will adjust (depending on the size of the dividend), but an option holder will get nothing.

If I am an option holder, I would like the repurchase, as a reduction of the number of shares makes the remaining shares worth more. (This isn't simple, the price paid by the company must be subracted from the company's net worth, but you get the idea.)

So, if you are a shareholder and are given the chance to vote for a stock split, repurchase or special dividend, choose the high dividend. If you are an optionholder, you won't want a special dividend.

In either case, shareholders and optionholders alike will not want a regular dividend to stop. This tends to send shockwaves through the market, as it alienates many investors who invest for the income.

Answer 2

It's clear that you are posting this due to a homework assignment...

Benefits of cash dividend vs. share repurchase depends on whether you think you can invest your money at a better rate than the company whose stock you own. It's tautalogical, but if you think you can invest the money better elsewhere, then you should sell the stock to begin with. From the company's perspective, a periodic share repurchase signals confidence in the company's direction and future.

Investors prefer cash to stock unless the stock's futures are greater than the epxected value of a risk-free cash savings investment.

Stock splits are only desirable for potential holders looking to get in at a lower absolute cost. And the investment banks love the transaction fees.

Answer 3

Do your own homework!

Answer 4

try this:
http://finance.ebookorama.com
and/or this:
http://credit-cards.ebookorama.com
good luck!