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 9QE

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Define each of the following terms: a. Optimal distribution policy b. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theory c. Signaling hypothesis; clientele effect d. Residual distribution model; extra dividend e. Declaration date; holder-of-record date; ex-dividend date; payment date f. Dividend reinvestment plan (DRIP) g. Stock split; stock dividend; stock repurchase
Treasury Stock Refer to the information for Heitman Company above. Required: 1. How will this transaction affect stockholders equity? How will this transaction affect net income?
Which of the following is true of a stock dividend? A. It is a liability. B. The decision to issue a stock dividend resides with shareholders. C. It does not affect total equity but transfers amounts between equity components. D. It creates a cash reserve for shareholders.
Explain the theory behind the dividends-based valuation approach. Why are dividends value-relevant to common equity shareholders?
When treasury stock is purchased for cash at more than its par value, what is the effect on total shareholders equity under each of the following methods?
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
Which of the following statements is correct? A. The optimal dividend policy is the one that satisfies management, not shareholders. B. The use of debt financing has no effect on earnings per share (EPS) or stock price. C. Stock price is dependent on the projected EPS and the use of debt, but not on the timing of the earnings stream. D. The riskiness of projected EPS can impact the firm's value. E. Dlvidend policy is one aspect of the firm's financial policy that is determined solely by the shareholders. Reset Selection
Which of the following is the reason that preferred dividends declared during the period are deducted from net income in calculating return on common stockholders’ equity? a. Preferred dividends are not paid from net income. b. Preferred dividends are not a part of stockholders’ equity. c. Preferred dividends are not paid until all common stockholders have received their dividends, so preferred dividends are not relevant in the formula and so must be taken out of the equation. d. Preferred dividends will reduce the amount of income available for distribution to common stockholders.
which one is correct please confirm? QUESTION 29 The dividend ____ states that investors will tend to be attracted to firms that have dividend policies consistent with the investor's objectives. a. "informational content" b. passive residual theory c. "clientele effect" d. signal
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
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 false
which one is correct please confirm? QUESTION 30 The dividend ____ states that investors will tend to be attracted to firms that have dividend policies consistent with the investor's objectives. a. "clientele effect" b. "informational content" c. passive residual theory d. signal