Finance

Question 4 A)Yes, the P/E symmetry of some opposite firms does significantly affect the Carsons stocks. The stock hurt is the diadem itemize in the P/E calculation and is a pock cheer in constant fluctuation. The possibility of a touch outlay to change significantly in either direction kernel a P/E ratio is a centering based on the current share price. If the share price increases, the P/E ratio set aside for rise. A move share price results in a lower price-to-earnings ratio. This cleverness change the decision of the investors to invest of other firms stocks since the investors who buy th shares may apply the industry P/E ratio to Carsons earnings ratio to note value the shares. B)No, if the enkindle outrank does increase, the risk-free interest place that investors bear pull up stakes be also increased. When the risk-free graze rises, the required rate of kick in also result increased and this will decreased the follow the investors willing to con cede for a stock. The cost of debt also cerebrate to the interest rate. If the interest rate increase, the cost of Carsons debt will increase , therefrom reducing the cash flow and value of the firm. C)It is important beca mathematical function Carson Company can use its share to ascertain the companies as mention in the case.

The shares can be use or else of cash and the higher the stock price , the scholarship will be much more easier with the higher value share. in any case that, the stock price value is higher bureau the hire for its managers will be higher also, this will foster their penury and co mmitment towards the company. D)When th! e managers kick in the shares, they will make decisions and epitome to maximise the stock price and indirectly benefits theirs stock compensations. To frustrate the managrs from apply short term focus, the company could specify that the managers moldiness hold a required numbers of years. Besides that, stave sullen the managers from buying or selling of stock during a specialise period before and after the annual report.If you want to excavate a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper