A corporation decides to cut its dividend from $2 per share to $1.50 per share
Give two rationales/theories to
explain why this action may cause the stock price to decrease and two rationales/theories to explain why this
action may cause the stock price to increase.
Decrease:
Information Effect N the decrease could signal management's expectations of decreasing future income and cash flow.
Liquidity N the decrease could signal a liquidity problem which would increase expected bankruptcy probabilities and
costs.
Increase:
Residual Dividend Theory N the company may have additional positive net present value projects that require a
greater share of the company's income and cash flow.
Tax Effect N due to differences in tax treatment, investors may prefer capital gains to dividend income.
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If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase
a. True b. False Indicate whether the statement is true or false
On July 1, 2017, James Company purchased Timothy Company's six-year 9% bonds with a face value of $200,000 for $196,000, which included $6,000 of accrued interest. The bonds, which mature on March 1, 2023, are to be held-to-maturity and pay interest semiannually on March 1 and September 1. James uses the straight-line method of amortization. The amount of income James should report for the
calendar year 2017 as a result of this investment would be A) $8,823.52. B) $9,882.36. C) $9,529.40. D) $8,117.64.
Always make a meeting ________________
a. plan or agenda b. entertaining c. convenient d. chart
Accrued interest on outstanding notes receivable should be recorded at the end of each accounting period.
Answer the following statement true (T) or false (F)