Quiz Ch 14 – T/F Bird-in-the-Hand Theory’s Implication on Dividend Yield and Growth
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
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.
Quiz Ch 14 – T/F Comparative Conceptual Impact of 100% Stock Dividend and 2:1 Stock Split on Stock Price
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
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.
Quiz Ch 14 – T/F Dividend Certainty and the “Bird-in-the-Hand Fallacy” from MM’s Perspective
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
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.
Quiz Ch 14 – T/F Dividend Irrelevance Theory: Impact on Cost of Capital and Stock Price
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
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.
Quiz Ch 14 – T/F Dividend Preferences and Investor Goals
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
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.
Quiz Ch 14 – T/F Effects of a “Reverse Split” on Outstanding Shares
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: A “reverse split” leads to a reduction in the total outstanding shares.
Quiz Ch 14 – T/F Ex-Dividend Date Impact on Stock Price
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: If a company announces a dividend of $1.50 per share on January 3, with payment set for January 31 to shareholders on record by January 17, then the stock price is expected to decrease by around $1.50 on January 15, the ex-dividend date.
Quiz Ch 14 – T/F Foundation of the Dividend Irrelevance Theory
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: The dividend irrelevance theory advanced by Miller and Modigliani is predicated on their assertion that the firm’s value is exclusively influenced by its fundamental earnings capability and business risk.
Quiz Ch 14 – T/F Impact of Declared Dividend on Stock Price
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: A declaration of a dividend on January 3, with a payout of $1.50 per share set for January 31, would generally lead to an approximate reduction of the stock’s price by around $1.50 on January 31.