Assignment
Hong Kong Community College
CCN2113 Financial Management
2013/14 Semester One Individual Assignment 2
Instructions to students:
1. You should type your answers within 2 pages on A4 sized paper, by using 12 font size of Times
New Roman with double-line spacing. Any answer exceed the 2 pages will NOT be marked.
2. Plagiarism will be treated seriously. Marks will be deducted for assignments that have been found wholly or partly involved in plagiarism (no matter these assignments are from the original authors or from the plagiarists).
3. Submission deadline: 21 Nov 2013 (Thur of Week 12)
4. Late submission and E-mail submission will NOT be accepted.
5. Write your full English name, student number and tutorial group on the front page of your assignment. 6. Half of your marks will be deducted if point no. 1 is violated.
Question 1 (24%)
On 18 February 2013, the board of directors of CC Company passes a resolution to pay a dividend of $5 per share on 13 March 2013 to all shareholders of record as of 28 February 2013.
(a) When is the ex-dividend date?
(b) Peter tells you that he expects the share price of CC Company will drop $5 on the ex-dividend date.
To make Peter’s argument valid, what are the assumptions behind for the argument of ex-dividend day price drop? Why?
Question 2 (60%)
Discuss in details on (1) the information content, or signalling, hypothesis; (2) the clientele effect; and (3) their effects on dividend policy.
Question 3 (16%)
In theory, there is always exist reasons behind stock splits, share repurchases and bonus issues of common stocks. Below are two real examples of stock split and bonus issues, write your own comment
(whether the stated reason is valid or not) on the company action based on your critical judgement from their stated reason and state of your reason.
Announced
Date
23 Aug 2010
Name
27 Oct 2010
Asia
Commercial
Holdings Ltd
Code
Weichai
2338
Power Co.,
Ltd.
0104
Action
Stated
CCN2113 Financial Management
2013/14 Semester One Individual Assignment 2
Instructions to students:
1. You should type your answers within 2 pages on A4 sized paper, by using 12 font size of Times
New Roman with double-line spacing. Any answer exceed the 2 pages will NOT be marked.
2. Plagiarism will be treated seriously. Marks will be deducted for assignments that have been found wholly or partly involved in plagiarism (no matter these assignments are from the original authors or from the plagiarists).
3. Submission deadline: 21 Nov 2013 (Thur of Week 12)
4. Late submission and E-mail submission will NOT be accepted.
5. Write your full English name, student number and tutorial group on the front page of your assignment. 6. Half of your marks will be deducted if point no. 1 is violated.
Question 1 (24%)
On 18 February 2013, the board of directors of CC Company passes a resolution to pay a dividend of $5 per share on 13 March 2013 to all shareholders of record as of 28 February 2013.
(a) When is the ex-dividend date?
(b) Peter tells you that he expects the share price of CC Company will drop $5 on the ex-dividend date.
To make Peter’s argument valid, what are the assumptions behind for the argument of ex-dividend day price drop? Why?
Question 2 (60%)
Discuss in details on (1) the information content, or signalling, hypothesis; (2) the clientele effect; and (3) their effects on dividend policy.
Question 3 (16%)
In theory, there is always exist reasons behind stock splits, share repurchases and bonus issues of common stocks. Below are two real examples of stock split and bonus issues, write your own comment
(whether the stated reason is valid or not) on the company action based on your critical judgement from their stated reason and state of your reason.
Announced
Date
23 Aug 2010
Name
27 Oct 2010
Asia
Commercial
Holdings Ltd
Code
Weichai
2338
Power Co.,
Ltd.
0104
Action
Stated