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NEW QUESTION: 1
Which of the following statements about dividend policy and capital structure is FALSE?
A. Assuming a world of taxes and bankruptcy, there is an optimal capital structure that maximizes earnings per share (EPS) and minimizes the cost of debt.
B. A company's growth rate equals the retention ratio multiplied by return on equity.
C. Companies should use the residual dividend model to set the long-run target dividend payout ratio, but should not use it to set the dividend payment in any one year.
D. If the board of directors decreases the target payout ratio, the stock price may increase or decrease.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The optimal capital structure is the one that maximizes the stock price and minimizes the cost of capital.
The other statements are true. "A company's growth rate equals the retention ratio multiplied by return on equity," is simply the word version of the equation g = (1 - Payout Ratio) * ROE. Know this equation for the exam! A company that uses the residual dividend model to set the dividend payment in any one year will not have a stable payout ratio, and investors will likely demand a higher required return to offset this uncertainty. The higher required return will result in a lower stock price. If the board of directors decreases the target payout ratio, the stock price may increase or decrease because there will be two opposing effects. For example, this may result in a decrease in stock price (due to lower dividend payout, D1), and an increase in the stock price due to increased funds available for reinvestment. Remember: g = (1 - Payout) * ROE. The net effect partially depends on investor's preference for dividends over capital gains or vice versa.
NEW QUESTION: 2
What best describes the AnyPlace Kiosk 3xx?
A. the classic model
B. the flagship model
C. the entry level model
D. the performance model
Answer: C
NEW QUESTION: 3
Where to enable feature that subjects can appear in only one session at a time?
Please choose the correct answer.
Response:
A. In Admin tools -> Manage Calibration Settings -> Global Settings
B. In Admin tools -> Manage Calibration Templates -> Advanced
C. In Admin tools -> Manage Calibration sessions -> Validation
D. In Admin tools -> Manage Calibration Sessions -> Global Settings
Answer: A
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