?Which of the following is true about the dividend relevance theory?
A. ?If investors prefer capital gain on their investment, then the tax effect of dividend receipts does not have any effect on the price of stocks.
B. ?If investors prefer current income on their investment, then the tax effect of dividend receipts does not have any effect on the price of stocks.
C. ?If investors prefer current income on their investment, the required return on equity should decrease as the dividend payout is increased.
D. ?If investors prefer capital gain on their investment, free cash flows to equity should decrease.
E. ?If investors prefer both capital gain and current income, the net income of the firm should decrease.
Answer: C
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Answer the following statement true (T) or false (F)
Kilduff Corporation's balance sheet and income statement appear below:Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Cash and cash equivalents$36 $38 Accounts receivable 36 32 Inventory 49 55 Property, plant and equipment 707 580 Less accumulated depreciation 316 315 Total assets$ 512 $ 390 Liabilities and stockholders' equity: Accounts payable$71 $64 Accrued liabilities 22 19 Income taxes payable 34 41 Bonds payable 71 100 Common stock 32 30 Retained earnings 282 136 Total liabilities and stockholders' equity$ 512 $ 390 Income StatementSales$ 1,174Cost of goods sold 771Gross margin403Selling and administrative expense 146Net operating income257Gain on sale of plant and equipment
14Income before taxes271Income taxes 81Net income$ 190The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue any bonds payable or repurchase any of its own common stock.The net cash provided by (used in) financing activities for the year was: A. $2 B. $(44) C. $(71) D. $(29)
Owens Jewelers uses the perpetual inventory system. On April 2, Owens sold merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of 2/15, n/30. Which of the following journal entries correctly records the sales revenue?
A) Sales Revenue 7,000 Accounts Receivable 7,000 B) Sales Revenue 7,000 Cost of Goods Sold 7,000 C) Accounts Receivable 2,500 Sales Revenue 2,500 D) Accounts Receivable 7,000 Sales Revenue 7,000
How is a ‘supply led’ market characterised?
a. there is a surplus of goods for sale b. there is a shortage of goods for sale c. there is an exact match between goods available for sale and goods wanted for purchase d. there are no goods available e. there are too many suppliers