Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Describe the Walters dividend model?
Walter's Model: - Walter's model maintains the doctrine that the dividend policy is relevant for the value of the firm. As-per to the Walter the investment policy of the firm and its dividend policy are interlinked. The major proposition of the Walter approach is the relationship among the following two factors:
(i) The return on firm's investment or else its internal rate of return (r) and (ii) Its cost of capital or the required rate of return (ke) As-per to the Walter approach optimum dividend policy of the firm shall be determined by the relationship between r and Ke.
(i) When Internal Rate of Return is in excess of Cost of Capital (r > Ke):- If the firm's return on investment is in excess of the cost of capital the firm must retain the earnings rather than distributing it to the shareholders for the reason that of the reason that the money is earning more profits in the hands of the firm than it would if it was paid to the shareholders.
(ii) When Internal Rate of Return is beneath Cost of Capital ( r < Ke) :- Alternatively if r is less than Ke the firm must pay off the money to the shareholders in the form of dividends because of the reason that the shareholders can earn higher return by investing it elsewhere.
(iii) If Internal Rate of Return is equivalent to Cost of Capital (r = Ke):- Finally if r is equal to Ke it is a matter of indifference whether the earnings are retained or distributed. For such firms there is no most favourable dividend policy.
Explain the concept of the world beta of a security. Answer: The world beta calculates the sensitivity of returns to a security to returns to the world market portfolio. It is
What does the "weight" refer to in the weighted average cost of capital? The weight pass on to in weighted average cost of capital refers to the portion of the total capital in
This is again a distinction which becomes important in case of a default. The senior bondholders have to be paid before the subordinate bondholders. This means th
Q. Define Arbitrage Process ? The basic theory of the MM approach if we ignore the taxes is that the total value of a firm should be constant irrespective of the degree of leve
What are the objectives of the Insurance Companies? Insurance companies: The main objective of insurance companies is to prevent individuals and firms (termed as policy-h
Explain how Eurocurrency is created. Answer: The center of the international money market is the Eurocurrency market. A Eurocurrency is a time deposit of money in an internationa
applicability of an operating cycle in a vegetable growing business
Fund Managers or the Asset Management Company (amc) The role of fund managers is highly significant in the mutual fund operations. So far, this role is being played by the Mutu
Write down what processes and data you would analyse when looking at the following scenarios and write down any improvements you could include to ensure that the problem would be l
The price volatility properties of bonds with the help of the graph of the price/yield relationship. Let us now, with the help of a graph, illustrate how duration estim
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd