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What is the signalling model of dividends predicts

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Reference no: EM132554696

Question 1: A commercial bill with a face value of $50 000 has a current price of $49291. This bill is trading at a yield of 7.5% which necessarily implies a time to maturity of:

Select one:

A. 70 days

B. 90 days

C. 80 days

D. 100 days

Question 2: A commercial bill with a face value of $50 000 has a current price of $49291. This bill is trading at a yield of 7.5% which necessarily implies a time to maturity of:

A. 70 days

B. 90 days

C. 80 days

D. 100 days

Question 3: The agency cost model of dividends suggests

A. Dividends should be smaller for slowly growing firms with large free cash flow

B. Dividend payments reduce managers' opportunity to spend free cash flow'

C. Managers seeking to increase share value should never pay dividends.

D. Dividends are a "cost" of corporate form of organization

Question 4: The signalling model of dividends predicts

A. Stock prices will fall at dividend increases

B. Lower quality firms will have larger dividend payouts due to poorer future prospects.

C. Managers expecting higher future earnings "signal" with higher dividends

D. Managers of firms with high growth opportunities "signal" these good investments with low dividends

Reference no: EM132554696

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