Dividend policy. Introduction: Stock Dividend: When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

Question

3 years ago, you invested $9,200. In 3 years, you expect to have $14,167. If you expect to earn the same annual return after 3 years from today as the annual return implied from the past and expected values given in the problem, then in how many years from today do you expect to have $28,798?

Answer 1

Question

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

(2)

Summary Introduction

To discuss: Clientele effect.

(3)

Summary Introduction

To explain: Catering theory.

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

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3 years ago, you invested $9,200. In 3 years, you expect to have $14,167. If you expect to earn the same annual return after 3 years from today as the annual return implied from the past and expected values given in the problem, then in how many years from today do you expect to have $28,798?

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Answer 2

Question

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

(2)

Summary Introduction

To discuss: Clientele effect.

(3)

Summary Introduction

To explain: Catering theory.

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

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Answer 3

Question

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

(2)

Summary Introduction

To discuss: Clientele effect.

(3)

Summary Introduction

To explain: Catering theory.

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

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Answer 4

Question

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

(2)

Summary Introduction

To discuss: Clientele effect.

(3)

Summary Introduction

To explain: Catering theory.

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

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Answer 5

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

(2)

Summary Introduction

To discuss: Clientele effect.

(3)

Summary Introduction

To explain: Catering theory.

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

Answer 6

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

Answer 7

Chapter 15, Problem 11IC

a.1.

Summary Introduction

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

Answer 8

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

Answer 9

2.

Summary Introduction

To explain: Dividend irrelevance theory and assumptions underlying the theory.

Answer 10

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

Answer 11

3.

Summary Introduction

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

Answer 12

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

Answer 13

b.(1)

Summary Introduction

To discuss: The information content or signaling, hypothesis.

Answer 14

(2)

Summary Introduction

To discuss: Clientele effect.

Answer 15

(2)

Summary Introduction

To discuss: Clientele effect.

Answer 16

(3)

Summary Introduction

To explain: Catering theory.

Answer 17

(3)

Summary Introduction

To explain: Catering theory.

Answer 18

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

Answer 19

(4)

Summary Introduction

To explain: The effect of catering theory on dividend policy.

Answer 20

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

Answer 21

c.1.

Summary Introduction

To calculate: Amount to be raised through equity.

Answer 22

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

Answer 23

2.

Summary Introduction

To calculate: Payout ratio and the effect on it under the residual dividend model.

Answer 24

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

Answer 25

3.

Summary Introduction

To explain: advantages and disadvantages of residual policy.

Answer 26

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

Answer 27

d.

Summary Introduction

To determine: The series of steps that many company’s take in setting dividend policy in practice.

Answer 28

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

Answer 29

e.

Summary Introduction

To explain: dividend reinvestment plan and its working.

Answer 30

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

Answer 31

f.

Summary Introduction

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

Answer 32

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

Answer 33

g.

Summary Introduction

To explain: Stock repurchase and its advantages and disadvantages.

Answer 34

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Ch. 15 - Discuss the pros and cons of having the directors...Ch. 15 - Prob. 2Q Ch. 15 - Would it ever be rational for a form to barrow...Ch. 15 - Modigliani and Miller (MM), on the one hand, and...Ch. 15 - How would each of the following changes tend to...Ch. 15 - One position expressed in the financial literature...Ch. 15 - Prob. 7Q Ch. 15 - What the difference between a stock dividend and a...Ch. 15 - Most firms like to have their stock selling at a...Ch. 15 - Prob. 10Q

Dividend policy. Introduction: Stock Dividend: When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

Concept explainers

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

To explain: Dividend irrelevance theory and assumptions underlying the theory.

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

To discuss: The information content or signaling, hypothesis.

To discuss: Clientele effect.

To explain: Catering theory.

To explain: The effect of catering theory on dividend policy.

To calculate: Amount to be raised through equity.

To calculate: Payout ratio and the effect on it under the residual dividend model.

To explain: advantages and disadvantages of residual policy.

To determine: The series of steps that many company’s take in setting dividend policy in practice.

To explain: dividend reinvestment plan and its working.

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

To explain: Stock repurchase and its advantages and disadvantages.

Chapter 15 Solutions

Dividend policy. Introduction: Stock Dividend: When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

Concept explainers

To explain: Dividend policy. Introduction: Stock Dividend: When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend

To explain: Dividend irrelevance theory and assumptions underlying the theory.

To explain: Reason for the investors choosing high dividend paying stocks and pay low or nonexistent dividends

To discuss: The information content or signaling, hypothesis.

To discuss: Clientele effect.

To explain: Catering theory.

To explain: The effect of catering theory on dividend policy.

To calculate: Amount to be raised through equity.

To calculate: Payout ratio and the effect on it under the residual dividend model.

To explain: advantages and disadvantages of residual policy.

To determine: The series of steps that many company’s take in setting dividend policy in practice.

To explain: dividend reinvestment plan and its working.

To explain: Stock dividends, stock splits and their advantages as well as disadvantages.

To explain: Stock repurchase and its advantages and disadvantages.

Chapter 15 Solutions

To explain: Dividend policy.

Introduction:

Stock Dividend:

When company decides to pay dividend in the form of shares instead of cash to its shareholders due to the shortage of liquid cash, itis said to be a stock dividend or scrip dividend