How would you relate information asymmetry to firm’s dividend policy?

Q: price-earnings ratio that is higher than other similar firms

A: A high price-earning ratio implies more price has to be paid for acquiring the stocks of the firm…

Q: Net profit margin is a key measure of profitability that relates the net profits of a firm to its…

A: · Ratio analysis used to identify the business performance of the company.· It is used to measure…

Q: why is the difference between a stock's current market price and its intrinsic value important to a…

A: Stock's current market price: The current stock price of a company is a price that an investor is…

Q: operating

A: Operating leverage is a leverage which helps us to know the cost structure of a company & also…

Q: Explain the Modigliani-Miller Payout Policy Irrelevance Proposition. What are the implications of…

A: Payout Policy refers to the manner of ways by which firm return out their part of the capital to…

Q: How had dividend policy been used by firms as a “signal”. Why is it necessary for firms to send such…

A: Dividend is paid by the firm to the investors as a return. It can be paid in cash or stock. Dividend…

Q: What is different between residual dividend, dividend policy and share repurchase ?

A: To arrange the funds for the business operations, firms issue various securities and pay return on…

Q: What inputs are required for the dividend growth approach?

A: Dividend: The dividend is the amount paid to buy the company to its shareholders out of its…

Q: What is the lowest dividend a firm could pay? What types of firms generally pay high dividends?…

A: Dividend is not compulsory to pay, when the company earns good profits , Board of directors…

Q: Write down what are the disadvantages of shareholders equity?

A: Equity is one of the common sources to raise finance. Whenever a company requires finance it can…

Q: Which of the following theories is supported by the argument that shareholders can transform a…

A: The correct answer is:b. "bird-in-the-hand" theoryExplanation:The "bird-in-the-hand" theory,…

Q: How can we determine the firm's liquidity?

A: Liquidity: It can be defined as the ease or comfort with which a firm can convert its securities and…

Q: What is the clientele effect, and how does it affect dividend policy irrelevance

A: Answer: Clientele effect: Clientele effect refers to companies which make customer-based dividend…

Q: analyze

A: Profitability analysis refers to allocation of expenses & analyzing the profits or earnings of…

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: What is “catering theory,” and how does it impact a firm’s dividend policy?

A: Earnings of the firm can either be distributed as dividend to the shareholders or retained as…

Q: What is meant by catering theory, and how might it impact a firm’s dividend policy?

A: Dividend policy refers to the policy which a company may have with respect to the payment of…

Q: What is meant by informational efficiency, and how does it affect the price of a stock?

A: Stock price fluctuation refers to the variation in the market price of a stock over a period of…

Q: What is the pecking order hypothesis, and how does it influence firms’ capitalstructures?

A: The pecking order theory or hypothesis is a model made popular by Stewart Myers and Nicolas Majluf…

Q: How a firm splits its income between retained earnings and dividends does not affects its rate of…

A: Income is the revenue earned by the company after the charge of all the associated expenses. A…