How does the market react to unexpected dividend changes? What does this tell us about dividend policy? How is it possible that dividends are so important, but at the same time, dividend policy is irrelevant?

Q: Why is P/E Multiples Approach better than book value per share when it comes to valuing the stocks…

A: P/E is a better approach because it uses earnings that reflect the performance of a firm.

Q: What is the major reason for a forward stock split?

A: Stock Split: Stock Split is a scheme in which a company’s total number of shares outstanding will…

Q: Suppose we observe from market data that, for a given non-dividend paying stock, See Image What…

A: Forward price (F0) is the price of forward contract at which buyer and seller of the contract agreed…

Q: Are short-term profits always in the best interest of stockholders? Explain

A: Short term profits are generally earned for a period of less than one years it may be quarterly,…

Q: Using the dividend growth model, why would a firm be hesitant to reduce the growth rate of its…

A: Dividend growth rate refers to proportional positive change in dividend amount from last paid…

Q: Why do we need to decrease the stock holdings and increase the cash orbond holdings? Explain with an…

A: One of the important decisions which is taken by the financial manager is to maintain the minimum…

Q: In examining investors’ preferences for dividends, it is useful to begin with the concept of…

A: Dividends are the amount which are distributed by the Company out of the profits earned during the…

Q: Is stock bonus a real dividend payment in principle?

A: Bonus shares are additional shares that are issued to company's shareholders out of its own…

Q: fine dividend policy. Why do investors want dividends? Explain the different types of dividend

A: Define dividend policy  In simple words, A dividend policy can be understood as the framework by…

Q: Why did MM refer to the Gordon–Lintner dividend argument as the bird-in-the-handfallacy?

A: INTRODUCTION:- Bird-in-the-hand Theory is one of the major theories concerning dividend policy in an…

Q: Write out the equation of corporate value model, and why there is a need of corporate value model…

A: The calculation of theoretical value of stock is known as stock valuation. It is important tool to…

Q: Why might stockholders be indifferent to whetheror not a firm reduces the volatility of its cash…

A: Stockholders will be indifferent if the firm does not reduce the volatility of cash flows because…

Q: Explain the difference between the Stable Dividend Policy and the Residual Dividend Policy?

A: A company's dividend distribution policy determines the number of dividends and the frequency with…

Q: Why do the clientele effect and the information contenthypotheses imply that investors prefer stable…

A: Clientele effect means the preference of different categories of investors to invest in specific…

Q: The dividend growth model of stock evaluation relies on several assumptions that might not be true…

A: Dividend growth model is defined as valuing the stock price of the company based on certain theories…

Q: When does reverse stock split occurs?

A: Stock split means reducing the face value of single share. For example, A share of $100 will be…

Q: Topic: Payout Policy What are the drawback(s) of distributing dividends instead of retained…

A: The dividend policy is a decision in deciding the exchange between paying dividends and retaining…

Q: Why is the ex-dividend date important to investors?

A: One business day before the record date of a stock is referred as ex-dividend date.  Whenever a…

Q: What are the advantages and disadvantages of higher dividends to investors?

A: Dividend can be defined as the division of profits accumulated by the company to its shareholders in…

Q: What is the difference between book value per share of common stock and market value per share? Why…

A: Book Value per share: Book value per share can be calculated as follows: BVPS =   Total Equity −…

Q: Stock dividends are ________ costly to issue than cash dividends. What is the missing word?

A: Cash dividend is exposing company to double taxation. The cash dividend is taxable in the hands of…

Q: Dividend changes may be used by management as a credible communication tool to signal investors…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Question Which of the following is NOT a reason for a high-dividend-payout policy? A.…

A: High Dividend Policy: It refers to a company where the company declares more of the proportion as…

Q: Topic: Payout Policy What is the advantage(s) of dividends against retained earnings?

A: Dividend is the share which is given to the shareholders when from the company's profit. Dividend…

Q: What is the Dividend Discount Model? What are some of the limitations of the Dividend Discount Model

A: There are several method on the basis of which the estimated required rate of return can be…

Q: What is stock split? How is it equivalent to paying a dividend?

A: The stock split is events that increase the outstanding shares and reduce the stated par value. For…

Q: Why do firms pay dividends? International evidence on the determinants of dividend policy.

A: Dividend means part of profit. Ordinary shares holders get dividend as a return. Payment of dividend…

Q: What did Modigliani and Miller assume about taxes and brokeragecosts when they developed their…

A: Modigliani – Miller theory is a major proponent of 'Dividend Irrelevance' notion that suggested that…

Q: on, what is the main problem with the dividend valuation models as compared to the free cash flow…

A: Dividend growth model is very good method but still has many problems.

Q: Which of the following is NOT a reason for a high-dividend-payout policy? A.        convenient and…

A: High Dividend Policy: It refers to a company where the company declares more of the proportion as…

Q: Companies are far more reluctant to cut dividend than to increase them. Why might this be the case?…

A: Dividends are payouts of a company’s profits to its shareholders as a return on capital invested by…

Q: Is stock price maximization the same as profit maximization?

A: Shareholders are the owner of the firm whose main motive is to maximize the value of the firm.…

Q: Is a company's dividend policy important?

A: Dividend policy is about the dividend that has to be paid by the company. It is about how much…

Q: What are some major advantages to cash dividends that simply aren’t available through share…

A: The dividends are the part of distributable profits that are given to the shareholders of the…

Q: Why do firms change their dividends policy?

A: Dividends are paid as a reward to the shareholders in lieu of the money given to the corporates for…

Q: crease an

A: The shareholders' will be considered as the owners of the company. The bond holders, and debenture…

Q: How are share repurchases an alternative to dividends, and why might investors prefer them

A: The share repurchase is the alternative to dividends because when a company repurchases it’s issued…

Q: Dividend changes may be used by management as a credible communication tool to signal investors…

A: A perfect capital market is the one where there are no arbitrage opportunities are present.

Q: Is a company's dividend policy important? Please explain why or why not

A: Dividend policy is concerned with financial policies that involve paying a cash payout now or paying…