Homework Answers
The clientele effect states that different clients have different preference towards dividends. The high tax bracket individuals prefer Capital gains instead of dividends as in that case dividends will be taxed at a higher rate. They wish that the business reinvest the cash back into business and the business grows so that they enjoy higher capital gains in the future. The low income tax bracket individuals prefer to receive current income in the form of dividends, as they fall in the low tax bracket and do not worry about being taxed.
So, the correct oprion is otion b.
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5. (Dividends and share repurchases: Analysis) The clientele effect implies that: (a) investors prefer high dividend...
The clientele effect implies that: (a) investors prefer high dividend paying shares (b)investors have varying preferences...
The clientele effect implies that: (a) investors prefer high dividend paying shares (b)investors have varying preferences regarding dividends (c) low tax bracket investors are in different to dividends
Client effect implies that: a) investors prefer high dividend paying shares b) investors have varying preferences...
Client effect implies that: a) investors prefer high dividend paying shares b) investors have varying preferences regarding dividends c) low tax bracket investors are indifferent do dividends
Which of the following statements regarding dividends and dividend policy is LEAST true? A. With ...
Which of the following statements regarding dividends and dividend policy is LEAST true? A. With no taxes, the idea of homemade dividends implies that dividend policy doesn't matter. B. A stock repurchase may be a preferable alternative to dividends, for investors in higher tax brackets. C. The clientele effect suggests that investors prefer higher dividend paying stocks. D. The signalling effects of dividends imply that a firm may be able to increase firm value by increasing dividends
What is the Tax Effect Theory on Dividends? Group of answer choices Investors prefer dividends. Investors...
What is the Tax Effect Theory on Dividends? Group of answer choices Investors prefer dividends. Investors prefer to consider all opportunities for payout. Investors are looking for companies with dividend growth in order to use the dividend income to pay personal taxes. Investors are sensitive to personal taxes and prefer a payout method that is tax efficient.
Explain why, in the absence of personal taxes, there is an equivalence between dividends and share...
Explain why, in the absence of personal taxes, there is an equivalence between dividends and share repurchases and why tax-paying investors prefer a share repurchase to a dividend payment.
(W8C19.20) (T/F) In the Tax Effect Theory of Dividends, investors prefer a higher dividend payout so...
(W8C19.20) (T/F) In the Tax Effect Theory of Dividends, investors prefer a higher dividend payout so they can write more off on their taxes. Select one: True False
1. Dividend policy A firm’s value depends on its expected free cash flow and its cost...
1. Dividend policy A firm’s value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm’s value and the investors in different ways. Some analysts have argued that a firm’s value should solely be determined by its basic earning power and the business risk of the firm. Which of these concepts would support these analysts’ argument? A. The signaling hypothesis B. Dividend irrelevance theory C....
"Clientele effect, tax differential, agency cost and information asymmetries affect the dividend value percieved by investors"....
"Clientele effect, tax differential, agency cost and information asymmetries affect the dividend value percieved by investors". Express your views on this statement. Justify your answer citing appropriate examples from Suadi Firms. (150-200 words) You have to comment on two of your classmates.
20. Which of the following Statements is correct? a. If a company uses the residual dividend...
20. Which of the following Statements is correct? a. If a company uses the residual dividend model to determine its dividend payments, dividends payout will tend to increase whenever its profitable investment opportunities increase. b. Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk. c. The tax code encourages companies to pay dividends rather than retain earnings. d. The stronger management thinks the clientele effect is, the more likely...
12. Dividend policy A firm’s value depends on its expected free cash flow and its cost...
12. Dividend policy A firm’s value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm’s value and the investors in different ways. Some analysts have argued that a firm’s value should solely be determined by its basic earning power and the business risk of the firm. Which of these concepts would support these analysts’ argument? The signaling hypothesis The clientele effect Dividend irrelevance theory...
"Clientele effect, tax differential, agency cost and information asymmetries affect the dividend value percieved by investors". Express your views on this statement. Justify your answer citing appropriate examples from Suadi Firms. (150-200 words) You have to comment on two of your classmates.
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