a. How would a firm’s decision to pay out a higher percentage of its earnings as dividendsaffect each of the following?1. The value of its long-term warrants2. The likelihood that its convertible bonds will be converted3. The likelihood that its warrants will be exercisedb. If you owned the warrants or convertibles of a company, would you be pleased or displeasedif it raised its payout rate from 20% to 80%? Why?
a. How would a firm’s decision to pay out a higher percentage of its earnings as dividendsaffect each of the following?1. The value of its long-term warrants2. The likelihood that its convertible bonds will be converted3. The likelihood that its warrants will be exercisedb. If you owned the warrants or convertibles of a company, would you be pleased or displeasedif it raised its payout rate from 20% to 80%? Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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a. How would a firm’s decision to pay out a higher percentage of its earnings as dividends
affect each of the following?
1. The value of its long-term warrants
2. The likelihood that its convertible bonds will be converted
3. The likelihood that its warrants will be exercised
b. If you owned the warrants or convertibles of a company, would you be pleased or displeased
if it raised its payout rate from 20% to 80%? Why?
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