EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 15, Problem 10QTD
Summary Introduction
To discuss: The many managers prefer a stable dollar dividend policy to a policy of paying out a constant percentage of each year’s earnings as dividends.
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thank you, what if instead of company is anticipating increasing its dividend it anticipated a decrease ?
In case you retain huge amount of profit of your company for long term investment, what financial decision do you take – to pay high cash dividend? Or to issue bonus share (stock dividend)? And explain why?
The idea that changes in dividend policy reflects managers' views about the firm's future earnings is known as:
a)
Modigliani and Miller Theory
b)
Payoff Theory
c)
Dividend Signaling Hypothesis
d)
Pecking Order Hypothesis
Chapter 15 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 15 - Prob. 1QTDCh. 15 - Prob. 2QTDCh. 15 - Prob. 3QTDCh. 15 - Prob. 4QTDCh. 15 - Prob. 5QTDCh. 15 - Prob. 6QTDCh. 15 - Prob. 7QTDCh. 15 - Prob. 8QTDCh. 15 - Prob. 9QTDCh. 15 - Prob. 10QTD
Ch. 15 - Prob. 11QTDCh. 15 - Prob. 12QTDCh. 15 - Prob. 13QTDCh. 15 - Prob. 14QTDCh. 15 - Prob. 15QTDCh. 15 - Prob. 16QTDCh. 15 - Prob. 17QTDCh. 15 - Prob. 18QTDCh. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - Prob. 5PCh. 15 - Prob. 6PCh. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Prob. 15P
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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."arrow_forwardWhich of the following situation in which the quality of the company’s pay-out to shareholders may decline a. Decrease in cash position b. Increase in positive NPV investment opportunities c. Increase in capital gains tax d. Decrease in marginal tax rate on dividends Which of the following concepts tells us that dividends are to be paid only when the capital budget has been already supplied? a. Gordon Growth model b. Dividend irrelevance theory c. Retain Earnings break-point principle d. Residual Dividend Modelarrow_forwardQuestion "Individuals living off of their dividends streams do not like reductions in their quarterly payments." This sounds like an argument for what type of dividend policy? A. residual dividend policy B. sticky dividend policy C. constantly declining dividend policy D. none of the abovearrow_forward
- 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.arrow_forward"Individuals living off of their dividends streams do not like reductions in their quarterly payments." This sounds like an argument for what type of dividend policy? A. residual dividend policy B. sticky dividend policy C. constantly declining dividend policy D. none of the abovearrow_forwardWould you prefer to invest in a company that has a regular dividend policy or a company that has a low regular and extra dividend policy? Please explainarrow_forward
- 5. An optimal dividend policy is one that takes into consideration that:a) Dividends should only be distributed based on the profits of the last period.b) Dividends can be distributed even if the company recorded losses in the last period.c) The balance between current dividends and future growth is achieved, maximizing the value of the company.d) It manages to attract investors who have a predilection for relatively high risks.arrow_forwardIf you bought a share of common stock, you would probably expect to receive dividends plus an eventual capital gain. Would the distribution between the dividend yield and the capital gain yield be influenced by the firm’s decision to pay more dividends rather than to retain and reinvest more of its earnings?arrow_forwardWhy would an analyst prepare a common-sized balance sheet? a. To better understand growth rates b. To better understand profit margins c. To better understand leverage and liquidity issues d. Because he is getting paid by the hourarrow_forward
- The most important factor to consider when determining the dividends to be declared is a. the impact of inflation on replacement costs b. any future planned use of retained earnings d. the future planned use of cash available at the date of dividend distribution e. shareholders’ expectation about the firms’ profitabilityarrow_forwardIf you want to value a firm that consistently pays out its earnings as dividends, the simplest model for you to use is the A) total payout method. B)valuation based on comparable firms. C) dividend-discount model. D) discounted free cash flow model.arrow_forwardWhat is the value of Ls stock for volatilities between 0.20 and 0.95? What incentives might the manager of L have if she understands this relationship? What might debtholders do in response?arrow_forward
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