One advantage of the residual dividend policy

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Which of the following statements is correct? a. One advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like. b. An increase in the stock price when a company decreases its dividend is consistent with signaling theory as postulated by MM. c. If the "clientele effect" is correct, then for a company whose earnings fluctuate, a policy of paying a constant percentage of net income will probably maximize the stock price. d. Stock repurchases make the most sense at times when a company believes its stock is undervalued. e. Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above average payout ratios.

2. A lockbox plan is

a. used to identify inventory safety stocks.

b. used to slow down the collection of checks our firm writes.

c. used to speed up the collection of checks received.

d. used primarily by firms where currency is used frequently in transactions, such as fast food restaurants, and less frequently by firms that receive payments as checks.

e. used to protect cash, i.e., to keep it from being stolen.

Reference no: EM131336168

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