It is assumed that the Cost of equity and rate of return are both constant under Walter’s Model of Dividend Relevance, if the cost of equity is higher than the rate of return, it is optimal that a. All the earnings for the period shall be distributed to shareholders b. No dividend to be given to shareholders c. The firm is indifferent as to distribute dividends or to reinvest the income d. None of the choices is correct.
It is assumed that the Cost of equity and rate of return are both constant under Walter’s Model of Dividend Relevance, if the cost of equity is higher than the rate of return, it is optimal that a. All the earnings for the period shall be distributed to shareholders b. No dividend to be given to shareholders c. The firm is indifferent as to distribute dividends or to reinvest the income d. None of the choices is correct.
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 7QTD
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It is assumed that the
a. All the earnings for the period shall be distributed to shareholders
b. No dividend to be given to shareholders
c. The firm is indifferent as to distribute dividends or to reinvest the income
d. None of the choices is correct.
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