An increase in share price following increase in dividend

Assignment Help Financial Management
Reference no: EM131189842

An increase in share price following an increase in dividends is logical if the:

a. firm borrows to obtain cash for the dividend

b. increased dividend signals higher future earnings

c. dividend is believed to be temporary

d. clientele effect is not important

Reference no: EM131189842

Questions Cloud

Statements is true regarding repurchase agreements : Which one of the following statements is true regarding repurchase agreements?
Some derivatives are traded on exchanges : Some derivatives are traded on exchanges; others are traded by financial institutions, fund managers, and corporations in the over-the-counter market, or added to new issues of debt and equity securities. Compare and contrast the different types of e..
Value for the first bond with eight years left to maturity : D Corporation has three bonds outstanding. All three have a coupon rate of 7 percent and a $1000 par value. The first bond has one year left to maturity. The second bond has 4 years left to maturity. What is the value for the first bond with eight ye..
What are bonds worth today if required market rate of return : B Corporation has $1000 par value bonds with 7 years left to maturity, a stated annual coupon rate of 4.5 percent (with annual interest payments). What are these bonds worth today if the required market rate of return is 6 percent? _________ What are..
An increase in share price following increase in dividend : An increase in share price following an increase in dividends is logical if the:
Present value for various compounding periods : Present Value for Various Compounding Periods Find the present value of $375 due in the future under each of the following conditions. Round your answers to the nearest cent. 12% nominal rate, semiannual compounding, discounted back 5 years
True about fixed-income securities : Which of the following is true about fixed-income securities?
What is the present value : What is the value today of a 15-year annuity that pays $640 a year? The annuity’s first payment occurs six years from today. The annual interest rate is 10 percent for Years 1 through 5, and 12 percent thereafter. What is the present value?
All future dividends are expected to grow at rate : MMK Cos. normally pays an annual dividend. The last such dividend paid was $1.55, all future dividends are expected to grow at a rate of 8 percent per year, and the firm faces a required rate of return on equity of 14 percent. If the firm just announ..

Reviews

Write a Review

Financial Management Questions & Answers

  Annual pretax cost savings

Whether to lease or buy? New system will provide $2.7 million in annual pretax cost savings. It costs $9.4 million depreciated straight-line to zero over 5 years. Tax rate is 34 percent, and borrow rate is 9 percent. Lease can be done for $2.5 millio..

  Existing credit card and make no subsequent payments

You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of .5 percent per year, compounded monthly for the first six months, increasing thereafter to 17.6 percent compounded monthly. Assume you transfer t..

  What are the implied interest rates

Suppose the spot price for Euro is $1.15, the futures price for delivery in 6 months is $1.1471286. Assume that the 6 month borrowing/lending rate in Euro is 0.75percent (annually, continuous compounding) and the corresponding rate in $ is 0.25percen..

  What is the firms cash conversion cycle

Cash Conversion Cycle. Company X is concerned about managing cash efficiently. On the average, inventories have an ago of 90 days, and accounts receivable are collected in 60 days. What is the firms operating cycle? What is the firms cash convesion c..

  When determining incremental cash flows for new project

Which of the following is not considered a relevant cash flow when determining incremental cash flows for a new project? Which of the following statements about payback (payback period) is most correct? Which of the following statements about capital..

  Contemplating leasing diagnostic scanner

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $6,500,000, and it would be depreciated straight-line to zero ove..

  Mutual fund-what was your return for the year

You invested $ 10,000 in a mutual fund at the beginning of the year when the NAV was $ 32.24. At the end of the year the fund paid $ .24 in short-term distributions and $ .41 in long-term distributions. If the NAV of the fund at the end of the year w..

  What is the addition to retained earnings

Billy’s Exterminators, Inc., has sales of $592,000, costs of $284,000, depreciation expense of $36,000, interest expense of $28,000, a tax rate of 35 percent and paid out $63,000 in cash dividends. What is the addition to retained earnings?

  Components used in production has annual demand

Mouse Parts produces mouse ears, white gloves and other parts that are incorporated into the production of Mickey Mouse souvenirs. One of the components used in production has an annual demand of 250 units, and this is constant throughout the year. C..

  No dividends will be paid on the stock

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend 10 years from today ..

  What is the price of put option with the same exercise price

A stock is currently selling for $56 per share. A call option with an exercise price of $60 sells for$6.56 and expires in three months. If the risk-free rate of interest is 2.60%per year, compounded continuously, What is the price of a put option wit..

  Bond with coupon rate-what is the invoice price

You purchase a bond with a coupon rate of 8.7 percent and a clean price of $870. If the next semiannual coupon payment is due in two months, what is the invoice price?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd