Description
1) Al Khadra Company has preferred shares that trade at a price of 50 riyals per share and distributes dividends of 3 riyals annually. It also has ordinary shares trading at a price of 45 riyals per share, and it is expected that each share will distribute dividends worth 3 riyals annually, and there is no expected growth for all types of dividends. In your opinion, what is the reason why common stock trades at a lower value than preferred stock? Explain in detail the reasons that influenced the evaluation factors.2) You were appointed as an executive director in a company in the nutrition sector, and your first observation was about the capital structure and you would like to meet with the financial director to discuss improving the capital structure and reaching the optimal capital structure. What is optimal capital and how can it be reached? Discuss with contribution.
