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Q: What are the real-world factors that would encourage firms to follow a high dividend policy
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Is this statement true or false? Give a reason for your answer.
"An increase in a firm's inclination to pay dividends may be because of a decline in profitable investment opportunities in the future."
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- A firm can increase its earnings growth yet not affect the value of its equity. True OR False ???Is this statement true or false? Give a reason for your answer. "The bird-in-hand theory suggests that a company can reduce its cost of equity capital by reducing its dividend payout ratio."Is the claim that lower company taxes adding to investments correct or is it debatable given the prediction on economic growth remains negative, and can you explain why? Your advise on this is ____________________ (provide your answer and justification. Feel free to use external resources to assist you in your answer if you prefer).
- Is this statement true or false? Give a reason for your answer. " Relevant or not, frequent changes in dividend policy can harm a firm."What would be a reason a company would want to understate income? A. to help nudge its stock price higher B. to lower its tax bill C. to show an increase in overall profits D. to increase investor confidenceWhich of the following statements is correct? A. If a firm’s assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm’s AFN to be negative. B. AFN is not always positive. C. If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm’s actual AFN must, mathematically, exceed the previously calculated AFN. D. Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio. E. Dividend policy does not affect the requirement for external funds based on the AFN equation.
- 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.Is this statement true or false? Give a reason for your answer. "A company can always increase its stock price by increasing its dividend payout ratio."Which of the following would likely increase return on equity (ROE)? a. Cutting operating costs b. Raising the dividend c. Increasing the firm's business risk d. Lowering the debt
- “When the stock market declines the net worth of companies decreases, causing the problem of asymmetric information to decrease as well.” Is this statement true, false, or uncertain? Explain your answer.Investors invest in a firm because they are motivated by the potential return on their investment. In evaluating a firm's potential for delivering that rate of return, what do they most look for in a firm's projections? The firm's ability to pay dividends The firm's plans to stock up on inventory in order to never run out of stock The firm's plans to extend credit terms to customers in order to gain more sales The firm's ability to generate cash by liquidating its marketable securities portfolioCheck all the factors that would be associated with an increase in a firm's price-to-earnings ratio. All the correct factors must be checked to receive credit for getting this question correct . a Increase in the beta of a firm's stock b Decrease in the beta of a firm's stock c Increase in the risk-free rate d Decrease in the risk-free rate e Increase in a firm's growth rate of cash flow f Decrease in a firm's growth rate of cash flow g Increase in the market risk premium h Decrease in the market risk premium