Stock repurchases tend to increase financial leverage

Assignment Help Financial Management

Reference no: EM131311054

1. Which of the following statements is correct?

a. If a firm repurchases its stock in the open market and then resells it later on at a higher price, then they will be subject to capital gains taxes.

b. An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would be looking to issue additional shares of common stock.

c. Stock repurchases tend to increase financial leverage.

d. If a company declares a 2-for-1 stock split, its stock price should roughly double.

2. A firm has Net Income of $500,000, a capital budget of $600,000, and a target debt ratio of 40%. If the firm follows a residual dividend policy, then what is their payout ratio?

a. 28%

b. 36%

c. 48%

d. 56%

Reference no: EM131311054

Questions Cloud

The real estate appraisal value : An apartment complex has recently come onto the market for sale and a prospective buyer would like your assistance in evaluating the property. The property is a 20 unit apartment complex with 6-studio apartments with rents of $550 per month, 9 one-be..

Compare global market research to domestic market research : Compare global market research to domestic market research.reate best practices for a global research strategy.Examine the relationship between segmenting and positioning and the global marketplace.

Cultural variables that influence multicultural teams : Explain how a core mission and sub-goals can make for a more successful temporary team. One of the best ways to begin a planning meeting is using the formula: who we are, why we're here, and what we hope to accomplish. Describe how temporary team..

Evaluation of the effectiveness of the us health care system : What is your evaluation of the effectiveness of the U.S. health care system in the context of delivery, finance, management, and/or sustainability

Stock repurchases tend to increase financial leverage : An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would be looking to issue additional shares of common stock. Stock repurchases tend to increase financial leverage. A firm has Net Income of $500,..

Discusses the federal intelligence surveillance court : Locate 1-2 articles from a news source that discusses the Federal Intelligence Surveillance Court (FISA Court) and write a 1-2 page paper that answers the following questions: How and why was this court created?

Determine the required velocity of the model fluid : Use the Euler number to predict the pressure drop in the model, if the pressure drop measured in the prototype pipeline was 0.05 psi.

Describe the role that evidence-based practice should play : Describe the role that evidence-based practice should play in the legislative process. Provide an example of the use of evidence-based practice in a legislative initiative. You can select an example from federal or state legislation

Build a prototype system that detects vital signs : Build a prototype system that detects vital signs, and store them in database, then process data and build a simple alerting smart phone application that will generate alert for certain scenarios that are concluded from acquired dada.

User Account

All Pages