Which of the following is TRUE? O Equity dividends are guaranteed Interest on debt is taxable WACC always constant for all business O Preferred stock pays a constant dividend every period
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- True or False, pls explain why 11) The peso amount of dividend changes yearly in a constant dividend payout policy True Falsea. All future prices and future dividends are expected values OTrue OFalse b. Shareholders elect: Cofficers OManagers ODirectors Oinvestors c. If Do= $2and dividends are expected to grow at a rate g = 5% then D7 !! O$2.68 OS2.1 O$1.39 O$2.81 d. The market price of a share is always equal to the estimated price of a share. OTrue OFalse e. A share with voting rights is more valuable than a share without voting rights OTrue OFalse Give your reasons(3) According to the Dividend-Discount Model Equation, the price of the stock today (Po) is equal to the present value of all of the expected future dividends (e.g., Divi, Div..., Divx) investors will receive, along with the cash flow from the sale of the stock (i.e., Ps) in year N (see, the following Equation). Div Div ₂ + L + 1+FE (1+E)² Po = + PN Div N (1+re)^ *(1+r)^ List three practical challenges (i.e., limitations) when using the Equation to calculate stock price (Po) in practice.
- True or False, pls explain why 13) A stable peso dividend policy tries to maintain a relatively stable percentage dividend over time True FalseAn investor expects a14% return on a $ 50 stock that pays a dividend of $ 2.50. Was is the implied capital gain rate on the price appreciation?7. Flatline Inc currently will pay a cash dividend of $2. Its price on the ex-dividend day is $40. What's the most likely price of Flatline on the day before the ex-dividend day? A. $40 B. $42 C. $38 D. $20 E. $2
- In the context of DDM, a dividend payout ratio equal to 100% implies that the future growth rate of dividends per share (DPS) will be equal to 0%. a. True b. FalseThe excess of retirement cost over the original issuance price is Debited to Share Premium - Treasury Shares Debited to Retained Earnings Debited to Share Capital Both a and b respectively Which of the following is an appropriate presentation of treasury stock?" As a marketable security As a deduction at cost from total stockholders' equity As a deduction at cost from total contingent liabilities As a deduction at par from total stockholders' equityAssume that the return on tax-exempt securities is 0.09 and that tp = 0.3, tg = 0.15, and te = 0.35, where tg is the rate on capital gains, te is the corporate tax rate, and to is the personal tax rate on dividends and interest. Equilibrium conditions exist. a. The return to investors on taxable bonds raised as new capital can be expected to be b. The return to investors on common stock (all capital gains) raised as new capital can be expected to be c. If taxable debt is issued, the company will have to earn before tax, and if common stock is issued the firm will have to earn before tax. d. If taxable debt is issued, the company will have to earn before tax, and if common stock is issued the firm will have to earn before tax.
- A stock is bought for $21.00 and sold for $26.00 one year later, immediately after it has paid a dividend of $1.50. What is the capital gain rate for thistransaction? A. 4.76% B. 19.05% C. 11.91% D. 23.81%Which of the following statements about dividends is TRUE? A.Dividends are typically set between P20 and P30 per shareB.Dividends cannot legally be reinvested in the same company where they were earnedC.Dividends are usually paid quarterly by well established publicly traded companiesD.Dividends are earned when you sell your shares for a higher price than when you bought themWhat will be the price of a share in year 4, given dividend just paid (Do) as $3, required rate of return as 20% and constant growth in dividend as 15% A. $170.78 B. $120.68 O C. $162.64 • D. $271.72