The constant growth model

Jun 21st, 2015
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Corporate shareholders are the owner of the corporation. As the owners, stockholders are granted certain rights; these rights can reduce losses, eliminate dilution, and give shareholders some control over who runs the corporation and, consequently, how the corporation is run.

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Question 1Corporate shareholders are the owner of the corporation. As the owners, stockholders are granted certain rights; these rights can reduce losses, eliminate dilution, and give shareholders some control over who runs the corporation and, consequently, how the corporation is run.Dividend rights- shareholders are awarded dividends based on the number of shares held. The firms board of directors makes the decision to pay dividends, but generally a corporation that has paid dividends in the past will continue to do so or risk a negative signal to the market that things are not going as well as they once were.Asset rights- If the corporation is liquidated, shareholders have claim to any residual value in proportion to the number of shares held. If a corporation fails and assets are sold off to cover outstanding debts, it is possible that some value will remain in the form of cash, tangible and intangible assets, securities, or other assets.Preemptive rights- corporations allow shareholders to have first rights to any new stock issues usually in proportion to the number of stocks currently held. This is called a rights offering and helps a shareholder mitigate dilution o

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