On 15 June 2012, shares in CliffCo were trading at $15. Later that day the company announced that its profits for the six months to 30 June 2012 would be 5% lower than the corresponding period the year before. At the close of trading on 16 June 2012, the price of CliffCo shares had fallen to $12.71 per share, and by 19 June 2012, the price was $11.80 per share. On 3 November 2012 the price was $9.40 per share. How could CliffCo shares suddenly be worth 15% less after their announcement in June 2012?
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q14: An 'ordinary share' is a share in
Q17: The Valuation Principle states that the value
Q37: Jumbo Transport, an air-cargo company, expects to
Q38: A company is expected to pay a
Q39: JRN Enterprises just announced that it plans
Q40: You expect KT Industries (KTI) will have
Q44: Assuming everything else remains unchanged, how does
Q44: What are dividend payments?
A) a part share
Q54: How can the dividend-discount model handle changing
Q58: Stocks that do not pay a dividend
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents