货币银行学全英课件Lecture 9 - Apr 20.pptVIP

Fundamentals of Finance Chap 10: The Features of Stock This Lecture… Sources of finance - equity Common stock Preemptive rights Dividend policy Cash dividends Stock dividends Stock splits reverse stock splits Dividend reinvestment plans Repurchase of stock Sources of Finance - Equity Debt Equity Firm prior claim residual claim Preferred stock Common stock Common Stock Common stockholders: Have a final claim on the firm’s assets and earnings after the firm has met its obligations to creditors and preferred stockholders. Have all the rights of ownership. Have the option to vote and elect the firm’s board of directors. Preemptive Rights Preemptive rights – right of current stockholders to maintain their proportionate ownership in the firm. Rights offering – sale of new securities to stockholders by offering them the option (right) to purchase new shares. Dividend Policy If a firm has earned profits, it can: Retains profits and increases the stockholders’ investment in the firm. Distribute profits as cash dividends to stockholders. Retained profits can be used to purchase income-earning assets or retiring outstanding debt. Dividend Policy Equity section of a firm’s balance sheet: