Thomson One - Business School Edition - Walt Disney Prospectus - Essay Example

The sale of common stock is an opportunity for the new stockholders to invest in the share of the company with a long term plan. The existing shareholders could also purchase the common stocks of the company by using the dividend proceeds allocated the company on each of the existing shares. The approach undertaken for marketability of the offered securities includes the engagement of independent brokers and dealers who would purchase the purchase the securities on behalf of the participants of the investment plan (Coyle, 2002).

The initial responsibilities of independent broker and dealer have been awarded to Citigroup which is subject to change from time to time. The Disney Shareholder services department plays the function of resolving any queries on the sales of securities and also undertakes post sale service like dispatching of the statements, allocation of dividends, etc. The contact numbers of the plan administrators are also made available for the purpose of contact as desired by the investors. These are systematic approaches undertaken by the Walt Disney Group in order to ensure better marketability of the securities.

Question 2 The dollar amount that Disney proposed to sell the public in 2008 is included in the features of the plan as given in the prospectus. The investment plan is offered for sale to the public in order to issue common stocks valued at certain dollar price. The securities were decided to be sold to the public either at initial investments for a 0ne time period or under the payment of a monthly interest from a recognized bank. The Walt Disney Group proposed to sell the securities to the potential new shareholders or to the existing shareholder at an initial investment of $250 per share of Walt Disney.

Apart from the initial investment, the Disney also proposed an alternative option for sale of the securities through a payment of $50 on a monthly basis through a recognized commercial bank. The proposed dollar value for the sale of the securities has increased from 2008 to 2010. The increase in the dollar value of sale could be attributed to the increase in demand of the securities over the years (Nevitt and Fabozzi, 2000). The increase in performance efficiency of the Walt Disney Group led to the increase in revenue of the company as a result of which the retained profits of the group increased over the years.

The profits allocated to the shareholders per share increased from 2008 to 2010. The rise in earnings per share and the dividend payout ratio led to the flow of market information that the Disney is looking at long term future prospects for growth and is expected to offer a higher return on equity over the years. The rise in demand of the securities raised the market prices of the security. As a result of this, he proposed sale value in dollars increased from 2008 to 2010. Question 3 The net amount obtained by Disney after the sell of shares approximates to around 51% of the sale price of each share in the investment plan.

The amount netted by Disney from the sale of these shares under the Investment Plan takes into account the discounts and the commissions involved in the process of sale. The discounts and commissions are subtracted from the price of sale to determine the net amount obtained by Walt Disney. The sale of the shares of Disney involves the role of an independent broker dealer who executed the transaction for purchase or sale of the shares on behalf of the participants of the investment pl