By calling the additional dividend an extra dividend, a firm avoids setting expectations that the dividend increase will be permanent. true or false
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By calling the additional dividend an extra dividend, a firm avoids setting expectations that the dividend increase will be permanent. true or false
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- If you were to argue that the firm's cost of equity, rs, increases as the dividend payout decreases, you would be making an argument ____ with MM's dividend irrelevance theory, and ____ with the theory that investors prefer dividends received in the current period rather than capital gains received in the future. Group of answer choices inconsistent; inconsistent consistent; inconsistent inconsistent; consistent consistent; consistent The argument above does not make sense; neither theory involves the cost of equity capital.A firm cannot maintain a return on common equity less than the required rate of return and stay in business indefinitely. True OR False ???One of the following decisions is not taken to increase the stock price: Select one: a. Maximize costs b. Attracting additional funds c. Maximize net income or profit d. Returning profits to owners over time
- It has been shown that in the absence of taxes and other market imperfections, the firm value will be unaffected by dividend policy. Explain the logic behind this conclusion. Next, describe three real-world factors that may cause one dividend policy to be preferable to another.The higher the firm's flotation cost for new common equity, the more likely the firm is to use preferred stock, which has no flotation cost, and reinvested earnings, whose cost is the average return on the assets that are acquired. Group of answer choices True Falsethank you, what if instead of company is anticipating increasing its dividend it anticipated a decrease ?
- It is possible to ignore cash dividends that occur very far into the future when using a dividend discount model because those dividends: will most likely be paid to a different investor. will most likely not be paid. have an insignificant present value. have a minimal, if any, potential rate of growth.Indicate whether the following statements are true or false. If the statementis false, explain why.f. If a firm follows a residual dividend policy then, holding all else constant, its dividend payout will tend to rise whenever the firm’s investment opportunities improve.True/False. The Dividend Discount Model can be applied to firms that do not pay dividends. Group of answer choices True False
- Evaluate the following:Managers should not focus on the current stock value because doing so will lead to an over emphasis on short term profits at the expense o long term profitsIs the following sentence true or false? Please explain. The cost of new equity (re) could possibly be lower than the cost of reinvested earnings (rs) if the market risk premium, risk-free rate, and the company's beta all decline by a sufficiently large amount.Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on the short term profits at the expense of long-term profits.