A higher dividend payout ratio entails? A• Lower marginal cost of capital B• Higher investment opportunity C• No effect in cost of capital D• Higher marginal cost of capital
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A higher dividend payout ratio entails?
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- Which one is more appropriate for cost of retained earning? A. Weighted Average cost of capital B. Opportunity cost to the firm C. Expected rate of return by the investor D. None of the aboveThe optimal capital structure: a. Maximizes the value of equity but not the tax shield associated with debtb. Minimizes the tax shield associated with debtc. Maximizes the value of the company but not necessarily the tax shield associated with debtd. Maximizes the value of the company and the tax shield associated with debt1.Which of the following is not something that you would consider when evaluating the optimal capital structure? d. Security Rating. b. EBIT-EPS Analysis. a. Agency Costs. f. Neither the second nor fourth answer is correct. c. Taxes. e. All of the above are considered when determining the optimal capital structure. 2.Which of the following is an argument for the relevance of dividends? b. Reduction of uncertainty. a. Informational content. c. Some investors' preference for current income. d. All of the above. 3.All of the following are true of stock splits EXCEPT: a. Market price per share is reduced after the split. d. Proportional ownership is unchanged. b. The number of outstanding shares is increased. c. Retained earnings are changed.
- Which of the following statements is CORRECT? Profit have no effect on capital Profit will decreases the capital Capital can only be derived from profits Profits will increases the capitalIn determining the optimal weighted average cost of capital, an MNC can never have too much debt. Group of answer choices True FalseThe capital asset pricing model expresses the cost of equity as a function of a return on riskless assets, a market premium, and: Select one:a. Unsystematic risk.b. None of these.c. The cost of debt.d. Systematic risk.
- True/False. The optimal amount of debt produces the highest weighted average cost of capital. Group of answer choices True FalseExplain why there is a cost to using reinvested earnings; that is,why aren’t reinvested earnings a free source of capital?If you were to argue that the firm's cost of equity, rs, increases as the dividend payout decreases, you would be making an argument ____ with MM's dividend irrelevance theory, and ____ with the theory that investors prefer dividends received in the current period rather than capital gains received in the future. Group of answer choices inconsistent; inconsistent consistent; inconsistent inconsistent; consistent consistent; consistent The argument above does not make sense; neither theory involves the cost of equity capital.
- The Cost of capital is the Select one: a. Average expected return on capital b. Highest expected return on capital c. Low expected return on capital d. High expected return on capital e. None of the optionWhich of the following is not a determinant of investment? a) The efficiency of capital equipment b) The level of consumer demand c) Interest rates d) The willingness of investors to buy new share issuesM-M theroy with perfect market suggests that divident payment: A.It dependes on the company's capital structure and retained earnings B.Has a positive impact on the value of a firm C.Has a negative impact on the value of a firm D.Has no impact on the value of a firm