Which one of the following creates the greatest uncertainty about the future dividends of a firm?
Select one:
a. A special dividend.
b. A residual dividend policy.
c. A homemade dividend.
d. The clientele effect.
Correct answer-------(b) A residual dividend policy.
.
Generally companies which expand their business by capital expenditure and fund their capital expenditure solely by earnings are able to pay less to shareholders.
Dividend is paid only when there is residual dividend available after capital expenditure is done.
Which one of the following creates the greatest uncertainty about the future dividends of a firm?...
A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debt/equity ratio, is called a ________. A) Clientele effect. B) Homemade dividend. C) Bird-in-the-hand approach. D) Constant dividend growth model. E) Residual dividend approach. Most firms are reluctant to ________ because of the associated implications concerning the firm. A) Pay a liquidating dividend. B) Pay a special dividend. C) Increase a cash dividend. D) Reduce a regular cash dividend....
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
Which of the following statements is correct? a. If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm’s dividend payout during that year. b. The clientele effect can explain why many firms change their dividend policies so often. c. One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele. d. Stock...
Which of the following statements is correct? a. If a firm follows the residual dividend model, then a sudden increase in the number of profitable projects would be likely to lead to a reduction of the firm's dividend payout ratio b. The clientele effect explains why so many firms change their dividend policies so often c. One advantage of adopting the residual dividend model is that this policy makes it easier for a corporation to attract a specific and well-identified...
Which of the following statements is correct? a. The tax code encourages companies to pay dividends rather than reinvest earnings. b. Companies may pay too high a price in a large open market repurchase if it takes too long to complete. c. An investor's capital gains from selling stock in a repurchase are always taxed at a higher rate than if the distribution were dividends. d. The stronger management thinks the clientele effect is, the more likely the firm is...
Which of the following are factors that influence business risk? Select one: a. Uncertainty about output prices b. Uncertainty about demand c. Uncertainty about input costs d. Product and other types of liability e. All of the above
Which one of the following is NOT an argument in favor of a low dividend policy? Select one: A. Shareholders hate the uncertainty arising from future dividends. B. Corporate tax rates exceed personal tax rates. C. A majority of stockholders have other investment opportunities that offer higher rewards with similar risk characteristics.
Which of the following statements is correct? a. One advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like. b. An increase in the stock price when a company decreases its dividend is consistent with signaling theory as postulated by MM. c. If the "clientele effect" is correct, then for a company whose earnings fluctuate, a policy of paying a constant percentage of net income will probably maximize the stock price. d....
6 Which of the following statements is correct? a. The tax code encourages companies to pay dividends rather than retain earnings. . b. If a company uses the residual dividend model to determine its dividend payments, dividends payout will tend b. to increase whenever its profitable investment opportunities increase . c. The stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the c. residual dividend model. d Large stock repurchases...
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...