PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 16, Problem 10PS
Information content of dividends Generous dividend payouts and high price–earnings multiples are correlated positively. Does this imply that paying out cash as dividends instead of repurchases increases share price? (Hint: Could the level of dividends be telling investors something about long-run earnings?)
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1. Is stock bonus a real dividend payment in principle?
2. Briefly describe the information signaling effect caused by dividend reduction announcement (in terms of assumption and market reaction)
4. Describe the output of the graph. Is there are any relation between the CFPS, EPS, and DPS.5. Describe how volatile the payout ratios are based on earnings and cash flows.6. Is there any correlation between (a) dividends and cash flows AND (b) dividends andearnings. From your analysis, can you say which of the two that dividend is more dependenton?
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chapter : market efficiency and behavioral finance
Chapter 16 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 16 - Dividend payments In 2017, Entergy paid a regular...Ch. 16 - Dividend payments Seashore Salt Co. has surplus...Ch. 16 - Repurchases Look again at Problem 2. Assume...Ch. 16 - Repurchases An article on stock repurchase in the...Ch. 16 - Company dividend policy Here are several facts...Ch. 16 - Prob. 7PSCh. 16 - Information content of dividends What is meant by...Ch. 16 - Information content of dividends Does the good...Ch. 16 - Information content of dividends Generous dividend...Ch. 16 - Prob. 11PS
Ch. 16 - Payout policy in perfect capital markets Go back...Ch. 16 - Payout policy in perfect capital markets Go back...Ch. 16 - Payout policy in perfect capital markets Respond...Ch. 16 - Prob. 15PSCh. 16 - Repurchases and the DCF model Hors dAge...Ch. 16 - Repurchases and the DCF model Surf Turf Hotels is...Ch. 16 - Repurchases and the DCF model House of Haddock has...Ch. 16 - Repurchases and the DCF model Little Oil has 1...Ch. 16 - Repurchases and EPS Many companies use stock...Ch. 16 - Dividends and value We stated in Section 16-3 that...Ch. 16 - Payout and valuation Look back one last time at...Ch. 16 - Dividend clienteles Mr. Milquetoast admires Warren...Ch. 16 - Prob. 24PSCh. 16 - Payout and taxes Which of the following U.S....Ch. 16 - Prob. 26PSCh. 16 - Prob. 27PSCh. 16 - Prob. 28PSCh. 16 - Dividend policy and the dividend discount model...Ch. 16 - Prob. 30PS
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- A measure of profitability analysis is a. times interest earned. b. cash flow per share. c. quick ratio. d. dividend payout ratio. would d be the right answer for this question?arrow_forwardExplain how holding a portion of the earnings (Plowback ratio) could increases the stock price.arrow_forwardTopic: Payout Policy What are the drawback(s) of distributing dividends instead of retained earnings?arrow_forward
- The market's reaction to the announcement of a change in the firm's dividend payout is referred to as the:Question 25Answer A. information content effect. B. MM Proposition II. C. MM Proposition I. D. efficient markets hypothesis.arrow_forwardThe 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_forwardRetaining earnings increase the value EPS than distribution of dividend. Explain.arrow_forward
- The optimal distribution strategy achieves a balance between capital gains and current dividends in order to raise the stock price of the company. true or falsearrow_forwardEarnings per share computation have received increased prominence on the income statement. How would an investor use such information in making investment decisions?arrow_forwardTopic: Payout Policy What is the advantage(s) of dividends against retained earnings?arrow_forward
- Which of the following will increase the price of a stock? Group of answer choices: A. Decrease in the required rate of return B. Decrease in the dividend growth rate C. Delay in the payment of dividends D. Decrease in earnings growtharrow_forwardwhat is the need to conduct the Solvency Analysis when the liquidity analysis serves the purpose of checking the cash position and liability paying condition of the company? What does PE Ratio tell the investors? Is there any difference between PE ratio, EPS and DPS (Dividend per Share), what insights both ratios provide to the investors? Which category of stakeholders rely on these two ratios? What is the difference between DPS and Dividend Yeild? answer full question pleasearrow_forward
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