Gordon and Lintner, recognizing that dividends affect stock prices, suggest that positive effects of dividend increases are attributable Question content area bottom Part 1 A. directly to the dividend policy B. not to the informational content but to the consistency in the payment of dividends C. to the informational content of the dividends with respect to future earnings D. directly to the optimal capital structure

Gordon and Lintner, recognizing that dividends affect stock prices, suggest that positive effects of dividend increases are attributable Question content area bottom Part 1 A. directly to the dividend policy B. not to the informational content but to the consistency in the payment of dividends C. to the informational content of the dividends with respect to future earnings D. directly to the optimal capital structure

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach

Section: Chapter Questions

Problem 2QE

See similar textbooks

Similar questions

There is a -impact of earnings on stock prices O a. Deductive O b. Positive O c. Normative O d. Negative
Define each of the following terms:a. Optimal distribution policyb. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theoryc. Signaling hypothesis; clientele effectd. Residual distribution model; extra dividende. Declaration date; holder-of-record date; ex-dividend date; payment datef. Dividend reinvestment plan (DRIP)g. Stock split; stock dividend; stock repurchase
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)
Define each of the following terms:a. Target payout ratio; optimal dividend policyb. Dividend irrelevance theory; bird-in-the-hand fallacyc. Information content (signaling) hypothesis; clienteles; clientele effectd. Catering theory; residual dividend modele. Low-regular-dividend-plus-extrasf. Declaration date; holder-of-record date; ex-dividend date; payment dateg. Dividend reinvestment plan (DRIP)h. Stock split; stock dividendi. Stock repurchase
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’ profitability
The expected return on a stock is called the __ from the investor's perspective, and the __ from the company's perspective. A. required return; cost of equity B. required return; cost of capital C. excess return; cost of equity D. excess return; cost of capital
a. How does the return on total assets differ from the return on stockholders’ equity?b. Which ratio is normally higher? Why?
Briefly describe the information signaling effect caused by dividend reduction announcement (in terms of assumption and market reaction)
Fountain Corporation's economists estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers of the company must choose between two mutually exclusive projects. Assume that the project the company chooses will be the firm's only activity and that the firm will close one year from today. The company is obligated to make a $5,400 payment to bondholders at the end of the year. The projects have the same systematic risk but different volatilities. Consider the following information pertaining to the two projects: Economy Probability .50 .50 Bad Good Low-Volatility Project Payoff $ 5,400 6,550 High-Volatility Project Payoff $ 4,800 7,150 a. What is the expected value of the company if the low-volatility project is undertaken? The high-volatility project? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) b. What is the expected value of the company's equity if the…
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.
The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because ofa. leverageb. solvencyc. Yieldd. quick assets
Which of these would best improve a firm's liquidity position? *a. Lower profitabilityb. Higher capital spendingc. Higher need for noncash current assets on the balance sheetd. Declaration of stock dividends