Quiz Ch 14 – Stock Repurchases, Stock Splits, and Investor Perceptions
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Among the options, which statement is INACCURATE?
Among the options, which statement is INACCURATE?
After a 2-for-1 stock split for Troll Brothers’ stock, which outcome is likely for your position?
Which statement is accurate?
Which statement is accurate?
True or false: A consequence of the bird-in-the-hand theory of dividends is that if dividend yield decreases, it necessitates a growth increase surpassing the reduction in proportion to maintain a firm’s constant required return, assuming other factors remain unchanged.
True or false: In conceptual terms, a 100% stock dividend and a 2:1 stock split are expected to yield equivalent impacts on the firm’s stock price.
True or false: Investors’ preference for high-payout firms, driven by the perceived dividend certainty over uncertain capital gains, has been challenged by Miller and Modigliani as the “bird-in-the-hand fallacy.” They argue that most dividends are reinvested in stocks, sharing risks with reinvested earnings.
True or false: Miller and Modigliani’s theory of dividend irrelevance posits that the proportion of earnings a company distributes as dividends holds no influence over its cost of capital, yet it does impact its stock price.
True or false: For a retired individual relying on investment income, a preference for high-payout stocks is logical to obtain cash without selling stocks. Conversely, an individual inclined to reinvest dividends might opt for a low-payout company to reduce taxes and brokerage costs.
True or false: A “reverse split” leads to a reduction in the total outstanding shares.