Under what conditions might dividend policy affect the value of the firm?   Question  options:   a)  Dividends are irrelevant because firms can simply repurchase shares   b)  None of the options are correct   c)  If a fixed dividend payout preempted the effort to invest in positive NPV projects   d)  Failure to pay a dividend results in bankruptcy   e)  Dividend policy can affect the value of equity, but not affect the value of the firm

In calculating the value of a firm's equity which of the following is incorrect? Multiple Choice O The market value of equity should be used as opposed to the book value The value of equity represents the value of the firm less the value of debt A premium is usually paid for equity with higher liquidity. D A discount is usually given for controlling interest in a company.

How should (a) signaling and (b) the clienteleeffect be taken into account by a firm as it considers its dividend decision? Do signaling and clientele effects make it easier or harder to determineif investors prefer high or low payout ratios? Dothese factors influence the desirability of a stabledistribution policy versus one that is flexible andthus varies with the company’s cash flows andinvestment opportunities?

Is this statement true or false? Give a reason for your answer. " Relevant or not, frequent changes in dividend policy can harm a firm."

Under which condition an external equity financing can be advantageous? Group of answer choices     When a firm wishes to raise additional capital by selling a portion of the existing owners' stock while maintaining control of the firm   When a firm's capital structure contains more equity than debt   All of the above   When common stock becomes less risky to the firm than fixed-income securities

Suppose a firm maintains its preferred debt-equity and pays dividends only after meeting its investment needs, what type of dividend policy is being referred to? A. Stable B. Hybrid C. Compromise D. Residual

Which one of the following statements about dividend policies is FALSE? a. One advantage of dividend reinvestment plans is that they allow shareholders to maintain a position in a company with minimal trading. b. One key disadvantage of a residual dividend policy is that it makes it hard for a company to follow a stable dividend policy. c. The clientele effect suggests that brokerage companies should choose customers whose dividend preferences match those of their client service borkers. d. The "bird-in-the-hand effect" is the argument that investors prefer dividends to capital gains because dividends are more certain than capital gains. e. In today's tax environment, gains through stock repurchases and dividend payments are taxed at the same rate

Which one of the following statements related to the Security Market Line approach to equity valuation is correct? Assume the firm includes debt in its capital structure.  Group of answer choices   This model considers a firm's rate of growth.   The model will never produce the same cost of equity as the dividend growth model.   The model is dependent upon a reliable estimate of the market risk premium.   This approach generally produces a cost of equity that equals the firm's overall cost of capital.   The model applies only to non-dividend-paying firms.

According to Modigliani and Miller, a firm's dividend policy is irrelevant:   if the financial markets are inefficient   if the financial markets are perfect   if the financial markets are efficient   if all investors are rational   because dividends are discretionary

The bird-in-the-hand argument espousing the importance of dividends or dividend relevance suggests that investors view a current (certain) dividend as less risky than future (uncertain) dividends or capital gains; nevertheless, proponents of this theory argue that this will have no significant impact on share price. Is this true or false