Strong reason for high-dividend-payout policy

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Reference no: EM131606194

1. Which of the following is a strong reason for a high-dividend-payout policy?

the avoidance or postponement of taxes on distributions for shareholders

high-dividend-payout clientele are willing to pay a higher price per share than low-dividend payout clientele

less need for additional costly outside funding

higher potential future returns for shareholders

2. Assume that you manage a firm that faces transaction exposure. Your company manufactures and sells toy dolls around the world. You just completed a large sale of dolls to a chain of stores in Sweden and received a promised payment of 1,000 krona per box of dolls. You have already sold 4,000 boxes of dolls and are now awaiting payment The exchange rate today is 7.2 krona per dollar. Over the next ninety days the indirect exchange rate unexpectedly moves from 7.2 to 7.6. To the nearest dollar, what is the fall in domestic revenue due this unexpected move in the exchange rate?

$21, 629

$25, 245

$29, 240

$55, 880

Reference no: EM131606194

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