Your firm uses the residual dividend model to set dividend policy. Market interest rates suddenly rise, and stock prices decline. Your firm's earnings, investment opportunities, and capital structure do not change. If the firm follows the residual dividend model, then its dividend payout ratio would increase.
Answer the following statement true (T) or false (F)
True
Rationale: (1) The firm's WACC would increase, (2) this would cause fewer projects to be accepted, (3) this would lead to a smaller capital budget, (4) thus less money would be needed to fund the capital budget, (5) thus less equity would be needed, so (6) the dividend payout ratio would increase.
You might also like to view...
Determine the March 2014 residual income for an investment center with the following information: Operating income for the month ended March 31, 2014 $5,180,000 Desired ROI 17% Actual ROI 28% Assets invested $18,200,000
A) $5,180,000 B) $3,094,000 C) $2,086,000 D) $8,806,000
Which of the following is an incorrect statement regarding the Economic Espionage Act?
A) Trade secrets are protected under the Economic Espionage Act. B) Under Section 1832 of the Economic Espionage Act, an individual who misappropriates a trade secret related to a product produced for interstate commerce, with the knowledge or intent that the misappropriation will harm the owner of the trade secret, may be subject to a prison term of up to 10 years. C) An organization convicted under Section 1832 of the Economic Espionage Act may be fined up to $1 million. D) Under Section 1831 of the Economic Espionage Act, the misappropriation of trade secrets with the knowledge that the secret will benefit a foreign power may lead to individual prison sentences of up to 15 years per offense and fines for organizations of up to $10 million.
When writing a report, always ____ your sources to avoid charges of plagiarism
A) site B) cite C) sight
Explain the "commercial activity" exception to the Foreign Sovereign Immunities Act