Quiz Ch 14 – T/F Residual Dividend Model’s Response to Interest Rate and Stock Price Changes

Fundamentals of Financial Management, Concise

Brigham and Houston

09th Edition

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True or false: Utilizing the residual dividend model for dividend policy, if your firm faces rising market interest rates causing stock price declines, while earnings, investment opportunities, and capital structure remain unchanged, the likely outcome is an elevated dividend payout ratio.

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