Question

True or False

1. Companies prefer stock buybacks to dividends because stock buybacks are much more flexible. Hence, market reactions to stock buybacks are more positive than dividends.  
2. As the economy recovers, the government gradually increases interest rates. This is good news for corporations because their valuations will be higher.
3. Agency problem arises when there are conflicts of interests among shareholders.
4. Growth firms tend to pay more dividends than mature firms do.
5. Merger and acquisitions come in waves. When the financing cost is low in the economy, more firms would like to make mergers and acquisitions.

Answer 1

1.
False as market reactions less positive

2.
False as valuations will be lower

3.
False as conflict among shareholders and management

4.
False as less dividends

P.S.: I am not allowed to answer more than 4 questions