Managerial Finance Essay

Managerial Finance Problem Review Set Dividends form _or_ system of g overnment 1) If a trustworthy adopts a residual distribution policy, distributions be opinionated as a residual after funding the capital budget. Therefore, the let on the levels investment opportunities, the lower its renderout ratio should be. a. True b. off-key 2) Even if a stock split has no information content, and stock- tranquilize if the dividend per share adjusted for the split is not growingd, there can still be a real benefit (i. e. , a higher evaluate for shareholders) from such a split, but any such benefit is plausibly small. a. True b. False 3)Which of the following should NOT influence a firms dividend policy decision? a. The firms ability to revivify or delay investment projects. b. A strong preference by most shareholders for current cash income versus capital gains. c. Constraints imposed by the firms bond indenture. d. The fact that much of the firms equipment has been rent rather than bought and owned. e. The fact that Congress is considering changes in the tax law regarding the revenue enhancement of dividends versus capital gains. 4) Which of the following would be most promising to lead to a decrease in a firms dividend payout ratio? a.Its stipend become more stable. b. Its access to the capital markets increases. c. Its RD efforts pay off, and it now has more high-return investment opportunities. d. Its accounts receivable decrease due to a change in its credit policy. e. Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages. 5) If a firm adheres rigorously to the residual dividend policyThe stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model. d. heavy(p) stock repurchases financed by debt tend to increase earnings per share, but they as well increase the firms financial risk. e. A dollar comp ensable out to repurchase stock is taxed at the same rate as a dollar paid out in dividends. Thus, both companies and investors are indifferent between distributing cash through dividends and stock repurchase programs. 7) PD Co. has a capital budget of $1,000,000. The company wants to maintain a target capital structure which is 30% debt and 70% equity.