Corporate finance questaire

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  • 1. How do you value a corporation? When do companies typically buy back stock? Why would a company issue stock rather than debt to finance its operations? What are some reasons a company would issue debt rather than equity to finance its operations? Where did the S&P 500 close yesterday? Who is a more senior creditor, a stockholder or a bondholder? Explain how a swap works. Typical of the profession What would you do if you weren't going into this profession? What do you know about the culture of this firm vs. other firms? What do you think an investment banker actually does on a day-to-day basis? How would you go about valuing this department for a hypothetical spin-off? Dividend Policy Dividends and repurchases are two popular ways of distributing cash back to shareholders. Do you agree with the statement that repurchases are substitutes for dividends (In other words, do you agree that given a fixed total payout, paying more dividends or repurchasing more shares doesn’t make any difference?)? A. Disagree B. Strongly disagree C. Agree D. Strongly agree In your opinion, the practice of dividend policy is … (Here, flexibility means that firms do not need to make consistency with historic payout policy and hence do not need to worry about changes of payout.) A. Very flexible B. Flexible C. Inflexible D. Very inflexible
  • 2. In your opinion, the practice of repurchase policy is... A. Very flexible B. Flexible C. Inflexible D. Very inflexible Do you agree with the statement that relative to repurchases, dividend policy is less flexible? A. Disagree B. Strongly disagree C. Agree D. Strongly agree Do you agree with the statement that there are negative consequences to reducing dividends? A. Disagree B. Strongly Disagree C. Agree D. Strongly agree Do you agree with the statement that there are negative consequences to reducing repurchases? A. Disagree B. Strongly disagree C. Agree D. Strongly agree Suppose that managers communicate that they want to cut dividends or repurchases in order to finance their good investments, your reaction is … A. Strongly positive B. Positive C. Strongly negative
  • 3. D. Negative Do you agree with the statement that dividends are more likely to be paid from permanent, operating cash flow? A. Disagree B. Strongly disagree C. Agree D. Strongly agree Do you agree with the statement that repurchases are more likely to be paid from temporary, excess non-operating cash flow? A. Disagree B. Strongly disagree C. Agree D. Strongly agree How quick is your reaction to dividend announcements? A. Very quick B. Quick C. Very slow D. Slow How quick is your reaction to repurchase announcements? A. Very quick B. Quick C. Very slow D. Slow Suppose there are dividend and repurchase announcements at the same time. Which of the following statements best describe your reaction?
  • 4. A. I react to dividend announcements much quicker than to repurchase announcements B. I react to dividend announcements quicker than to repurchase announcements C. I react to dividend announcements more slowly than to repurchase announcements D. I react to both of them equally Suppose there is a dividend increase announcement. Which of the following statement about share prices is most accurate A. Prices will go up immediately B. Prices will go up gradually over time C. Prices don’t change at all D. Prices will decline Suppose there is a repurchase increase announcement. Which of the following statement about share prices is most accurate? A. Prices will go up immediately B. Prices will go up gradually over time C. Prices don’t change at all D. Prices will decline Do you agree with the statement that it is costly or difficult to get to understand dividends? A. Disagree B. Strongly disagree C. Agree D. Strongly agree (If possible, could you specify what kind of costs or difficulties are?)_________________________________________________ Do you agree with the statement that it is costly or difficult to get to understand repurchases? A. Disagree B. Strongly disagree C. Agree
  • 5. D. Strongly agree (If possible, could you specify what kind of costs or difficulties are?) _________________________________________________ Which one of the following statements best describes your opinion? A. To understand dividends is more difficult than to understand repurchase B. To understand dividends is easier than to understand repurchase C. To understand dividends is much easier than to understand repurchase D. To understand dividends is as difficult as to understand repurchase Do you agree with the statement that you know more about dividends than about repurchases? In other words, do you agree that you are more familiar with dividends than with repurchases? A. Disagree B. Strongly disagree C. Agree D. Strongly agree Following share repurchase announcements, two types of repurchasing policy exist. Actual share repurchases are sometimes made intensively and sometimes are made slowly over time. How do you react to intensive repurchases (i.e., actual repurchases)? A. Very strongly B. Strongly C. Weakly D. No reaction How do you react to slow repurchases (i.e., actual repurchases)? A. Very strongly B. Strongly C. Weakly D. No reaction
  • 6. Repurchase: Do you attempt to ‘time the market’ using repurchases (i.e., create long-term shareholder value by buying back shares when they are undervalued by the market)? A. Yes B. No If your answer to the previous question is ‘Yes’, which of the following methods do you prefer? (If your answer is ‘No’, please ignore this question.) A. Immediate intense repurchasing of large number of shares B. Slow gradual repurchasing of small number of shares over a long time, And why? ____________________________________________________________ _____________________________________________________________________________________ _________________________________ How important is to communicate the reason for dividend cuts with investors? A. Unimportant B. Very unimportant C. Important D. Very important How important is to communicate the reason for repurchase cuts with investors? A. Unimportant B. Very unimportant C. Important D. Very important Do you agree with the statement that the stability of future earnings is important to your company’s dividend decisions? A. Disagree B. Strongly disagree
  • 7. C. Agree D. Strongly agree Do you agree with the statement that the stability of future earnings is important to your company’s repurchase decisions? A. Disagree B. Strongly disagree C. Agree D. Strongly agree If the forecasted future earnings are volatile, which of the following decisions could be your choice? A. Paying out only through dividends B. Paying out only through repurchases C. Paying out through both dividends and repurchase D. Do not pay out at all If the forecasted future earnings are stable, which of the following decisions could be your choice? A. Paying out only through dividends B. Paying out only through repurchases C. Paying out through both dividends and repurchase D. Do not pay out at all