If the Announcement of a Share Sale Does in Fact

question 25

True/False

If the announcement of a share sale does in fact trigger a decline in share price, this reinforces the effects of flotation costs incurred with new equity issues.Further, this implies a larger break in the MCC schedule.

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Definitions:

Cash Outflows

The movement of money out of a business as expenditures, payments, or investments, which reduce the company's cash balance.

Profitability Index

A calculation that measures the profitability of an investment, determined by dividing the present value of future cash flows by the initial investment cost.

NPV Ranking

A method of evaluating investment opportunities by ranking them based on their Net Present Value, which estimates the present value of future cash flows minus initial investments.

IRR Ranking

The process of ordering investments or projects by their Internal Rate of Return, which estimates profitability.