Quiz Ch 14 – Dividend Policies and Effects
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Which statement is accurate?
Which statement is accurate?
Among the options, which statement is accurate?
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.
True or false: Assuming a curve depicting Firm U’s WACC against its debt ratio resembles a shallow “U,” and Firm V’s curve resembles a sharp “V,” both firms having debt ratios that minimize their WACCs, and with other factors remaining constant, it would be simpler for Firm V than for Firm U to sustain a consistent dividend amidst fluctuating investment prospects and yearly earnings.