Will the cost of equity be zero
Will the cost of equity be zero if dividends paid to common stockholders will not be legal obligations of a corporation?
Expert
Even though common stockholders don’t have a contractual claim on dividends but the funds supplied by stockholders definitely have a cost. Equity investors are mostly paid last and thus they are under the greatest risk among all the capital suppliers. If a company is not earning a higher return rate on equity funds to pay off for the higher risk taken by equity investors, price of the stock is going to fall and consequently the value of the firm.
Presently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The interest rate of three month is equal to 8.0% per annum in the U.S. & 5.8% per annum in the U.K. One can borrow as much as $1,500,000 o
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A CD/$ bank trader is at present quoting a small figure bid-ask of 35-40, while the rest of the market is trading at CD1.3436-CD1.3441. What is implied regarding the trader's beliefs by his prices?The trader have to think the Canadian dollar wi
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