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EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103145947
Author: DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem 28P
Explain under which conditions an increase in the dividend payment can be interpreted as a signal of the following:
- a. Good news
- b. Bad news
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Students have asked these similar questions
a. How does the return on total assets differ from the return on stockholders’ equity?b. Which ratio is normally higher? Why?
Choose the letter of the correct answer
2. When the cost model/method is used to account for an investment, which of the following would not result in an adjustment to the amount recorded in the investment account?
A. The investee declares a regular dividend
B. The investor sells some of the stock
C. The investee declares a liquidating dividend
D. The stock’s market value decreases to a point where is it below the investor’s cost
1. Is stock bonus a real dividend payment in principle?
2. Briefly describe the information signaling effect caused by dividend reduction announcement (in terms of assumption and market reaction)
Chapter 17 Solutions
EBK CORPORATE FINANCE
Ch. 17.1 - Prob. 1CCCh. 17.1 - Prob. 2CCCh. 17.2 - Prob. 1CCCh. 17.2 - In a perfect capital market, how important is the...Ch. 17.3 - Prob. 1CCCh. 17.3 - Prob. 2CCCh. 17.4 - Prob. 1CCCh. 17.4 - Prob. 2CCCh. 17.5 - Is there an advantage for a firm to retain its...Ch. 17.5 - Prob. 2CC
Ch. 17.6 - Prob. 1CCCh. 17.6 - Prob. 2CCCh. 17.7 - Prob. 1CCCh. 17.7 - Prob. 2CCCh. 17 - Prob. 1PCh. 17 - ABC Corporation announced that it will pay a...Ch. 17 - Prob. 3PCh. 17 - RFC Corp. has announced a 1 dividend. If RFCs...Ch. 17 - Prob. 5PCh. 17 - KMS Corporation has assets with a market value of...Ch. 17 - Natsam Corporation has 250 million of excess cash....Ch. 17 - Suppose the board of Natsam Corporation decided to...Ch. 17 - Prob. 9PCh. 17 - Suppose BE Press paid dividends at the end of each...Ch. 17 - The HNH Corporation will pay a constant dividend...Ch. 17 - Prob. 12PCh. 17 - Prob. 13PCh. 17 - Prob. 14PCh. 17 - Suppose that all capital gains are taxed at a 25%...Ch. 17 - Prob. 16PCh. 17 - Prob. 17PCh. 17 - Prob. 18PCh. 17 - Prob. 19PCh. 17 - A stock that you know is held by long-term...Ch. 17 - Clovix Corporation has 50 million in cash, 10...Ch. 17 - Assume capital markets are perfect. Kay Industries...Ch. 17 - Redo Problem 22., but assume that Kay must pay a...Ch. 17 - Harris Corporation has 250 million in cash, and...Ch. 17 - Redo Problem 22, but assume the following: a....Ch. 17 - Prob. 26PCh. 17 - Use the data in Table 15.3 to calculate the tax...Ch. 17 - Explain under which conditions an increase in the...Ch. 17 - Why is an announcement of a share repurchase...Ch. 17 - AMC Corporation currently has an enterprise value...Ch. 17 - Prob. 31PCh. 17 - Prob. 32PCh. 17 - Explain why most companies choose to pay stock...Ch. 17 - Prob. 34PCh. 17 - Prob. 35P
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- (c) One reason for paying dividend is the “clientele effect". Explain how this affects the decision to pay dividend? eearrow_forwardWhich of the following does not decrease retained earnings? Select one: a. Stock dividends b. Cash dividends c. Net loss d. Net incomearrow_forwardTrue or False: Dividends declared and paid result in a decrease to the common stock's account balance. Select one: True Falsearrow_forward
- Briefly describe the information signaling effect caused by dividend reduction announcement (in terms of assumption and market reaction)arrow_forwardThere is a -impact of earnings on stock prices O a. Deductive O b. Positive O c. Normative O d. Negativearrow_forwarda) Where did the profit go? b) What do you mean by dividend? Explain c) How was it possible to distribute dividends in the presence of a loss?arrow_forward
- Which of the following will reduce Retained Earnings? a. Declaration of a stock dividendb. Payment of a cash dividendc. Profit for the periodd. None of thesearrow_forwardWhen is potentially dilutive security anti-dilutive? A. The definition of diluted earnings per share requires that diluted earnings per share reflect the best-case scenario or maximum potential decrease in EPS. So if security decreases the earnings per share ratio, it is, by definition, anti-dilutive. B. The definition of diluted earnings per share requires that diluted earnings per share reflect the worst-case scenario or maximum potential decrease in EPS. So if security increases the earnings per share ratio, it is, by definition, anti-dilutive. C. The definition of diluted earnings per share requires that diluted earnings per share reflect the best-case scenario or maximum potential increase in EPS. So if security decreases the earnings per share ratio, it is, by definition, anti-dilutive. D. The definition of diluted earnings per share requires that diluted earnings per share reflect the worst-case scenario or maximum potential increase in EPS. So if a security…arrow_forwardIs it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?arrow_forward
- Between horizontal and vertical analysis which do you think is better to use when analyzing an income statement and why? When a promise or order to pay unconditional? Explainarrow_forwardTrue or False Returns from the overall market can be thought of as a combination of three factors: operating profit, significant expansion or contraction and amount of dividendsarrow_forward7. The internal rate of return (IRR) can best be described as: A. the discount rate at which a set of cash flows have a zero net present value B. the discount rate at which a set of cash flows have a positive net present value c. the rate which the business has to pay to raise finance for an investment the return required by the managers of the business D.arrow_forward
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