About the dividend growth model

Assignment Help Financial Management
Reference no: EM131545187

1. Which of the following statements related to M&M Proposition II is/are correct?

I. the capital structure of a firm determines where the firm is located.

II. the cost of equity rises as the firm increases its use of debt financing.

III. without corporate taxes, a firm's cost of equity is a linear function with a slope equal to RD.

IV. the cost of debt is equivalent to the required rate of return on a firm's assets.

V. the size of the pie does not depend on how the pie is sliced.

VI. none of the above statements is correct.

VI only

I and III only

IV only

II only

I, II, III and IV only

2. Which of the following statements is/are correct in relation to M&M Proposition II with no taxes?

I. The required return on assets is higher than the weighted average cost of capital.

II. Financial risk is determined by the debt-equity ratio.

III. Financial risk determines the return on assets.

IV. The cost of equity declines when the amount of leverage used by a firm rises.

III and IV only

I and II only

I only

I and IV only

II only

3. Which of the following about the dividend growth model is/are correct:

I. is not as reliable as the estimated rate of growth.

II. can only be used if historical dividend information is available.

III. does consider the risk that future dividends may vary from their estimated values.

IV. applies even when a firm does not pay dividends.

V. uses standard deviation to measure the systematic risk of a firm.

II and III only

I only

I, II and IV only

II, III and V only

III only

Reference no: EM131545187

Questions Cloud

Describe different types of finance companies : In detail, name and describe different types of finance companies.
Discount rate assigned to an individual project : The discount rate assigned to an individual project should be based on. Pro forma financial statements for a proposed project should:
Calculate the present value of the difference in profit : Calculate the profit for 2018 assuming your firm does buy the machine. Calculate the Present Value of the difference in profit.
Consider the longest-maturity bond of the company : Consider the longest-maturity bond of the company. Assuming a current discount rate of 6%, what is the value of this bond?
About the dividend growth model : Which of the following about the dividend growth model is/are correct:
Calculate the property tax bill : The Johnson family has property with an appraised value of $90,000.00. Calculate their 2009 property tax bill.
What price must she sell the lot at the end of the year : If income taxes amount to 15% of the capital gain, at what price must she sell the lot at the end of the 25 years?
Effectively manage risk is competitive advantage : Being able to effectively manage risk is competitive advantage. List of some of the types of risk your firm faces.
What is the cost of this investment strategy : You establish a straddle on Walmart using September call and put options with a strike price of $49. What is the cost of this investment strategy?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd