Dividend theorybased on what you know about dividend theory

Assignment Help Business Management
Reference no: EM13364416

Dividend Theory

Based on what you know about dividend theory, determine the correctness of each of the following statements:

- a. If the dividend irrelevance theory (which is associated with Modigliani and Miller) were exactly correct, and if this theory could be tested with good data, then we would find in a regression of dividend yield and capital gains, a line with a slope of -1.0.

- b.The tax preference and bird-in-the-hand theories lead to identical conclusions as to the optimal dividend policy.

- c.If a company raises its dividend by an unexpectedly large amount, the announcement of this new and higher dividend is generally accompanied by an increase in the stock price. This is consistent with the bird-in-the-hand theory, and Modigliani and Miller used these findings to support their position on dividend theory.

- d. If it could be demonstrated that a clientele effect exists, this would suggest that firms could alter their dividend payment policies from year to year to take advantage of investment opportunities without having to worry about the effects of changing dividends on capital costs.

Reference no: EM13364416

Questions Cloud

Which of the following is not a major change force that : which of the following is not a major change force that contributed to the high level of merger activity in the
As gillettes ceo james m kilts had reason to expect a : as gillettes ceo james m. kilts had reason to expect a lucrative 2005 with annual pay likely exceeding 23 million. but
Managerial applicationsassuming that you are a first in : managerial applicationsassuming that you are a first in line junior managersupervisor in a business establishment in
Business issuesolve a business issue such as job : business issuesolve a business issue such as job dissatisfaction learning theories narcissism etc. from your own
Dividend theorybased on what you know about dividend theory : dividend theorybased on what you know about dividend theory determine the correctness of each of the following
Theoretical implications of various theories of equitythe : theoretical implications of various theories of equitythe proprietary theory the entity theory and the funds theory are
Examine the companys fundamentals of financial management : examine the companys fundamentals of financial management in detail.for the purposes of this project you may take one
Theory of motivationthe article spoke about cutting down on : theory of motivationthe article spoke about cutting down on employee benefits as a cost saving effort. in my opinion
Diversity and motivational theories paperprepare a paper in : diversity and motivational theories paperprepare a paper in which you select four types of diversity and demographic

Reviews

Write a Review

Business Management Questions & Answers

  Discrimination based on national origin

Discrimination Based on National Origin.

  Elucidate how does china labour market also growth in it

the world's capabilities continue to grow also the price offset by the Indian labour increases. Elucidate how does China's labour market also growth in IT impact India's growth plans.

  Interview questions for senior level accountant

Provide some good interview questions for a Senior Level Accountant to ask someone that is interviewing for a Senior Level Accountant?

  Acme made income tax payments totalling

In its first year of operations Acme Corp had income before tax of $400,000. Acme made income tax payments totalling $150,000 during the year as well as has an income tax rate of 40%

  Illustrate what impacts the exchange relationship

Illustrate what impacts the exchange relationship when the customer does not particularly want to BE a customer (example: funeral services, diabetic equipment).

  Scoring system for a weighted application blank

Scoring System for a Weighted Application Blank - How is the scoring system developed for a weighted application blank? Provide an example of how this works.

  Explain what is meant by stakeholder theory

What is meant by stakeholder theory and who are the stakeholders of a corporation? Why is there a need to have a uniformity of law in certain areas and what are the two ways in which uniformity of law can be attained?

  Find outing the correct balance is most critical

As the United States continues to recover from this economic downturn, it is vital which companies remain competitive in compensation, benefits and other important areas of the hiring and job process. Setting salary structures too high or too low..

  Describes contingency approaches

Which of the subsequent BEST describes contingency approaches Contingency approaches are leadership styles that seek to delineate the characteristics of situations. Contingency approaches are leadership styles appropriate for one situation w..

  Description of business models

Select two reputable internet based companies, explaining what lessons from each business model could be applied to your company.

  Explain products to retails establishments

Fastner products Inc a maker of nuts as well as bolts sells its products to retails establishments. IT charges one price to small family owned hardware stores as well as a lower price to national chains

  Example on maslows hierarchy of needs model

What additional social and cultural factors will I consider to analyze my clients' behavior and determine what service criteria do I think my clients use to select the type of service I offer

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