What is the value of a stock dividend to a shareholder

Assignment Help Financial Management
Reference no: EM13927272

1. Why do many managers prefer a stable dollar dividend policy to a policy of paying out a constant percentage of each year's earnings as dividends?

2. Under what circumstances would it make sense for a firm to borrow money to make its dividend payments?

3. Some people have suggested that it is irrational for a firm to pay dividends and sell new stock in the same year because the cost of newly issued equity is greater than the cost of retained earnings. Do you agree? Why or why not?

4. What is a dividend reinvestment plan? Explain the advantages of a dividend reinvestment plan to the firm and to shareholders.

5. Why do many firms choose to issue stock dividends? What is the value of a stock dividend to a shareholder?

6. What are the tax limitations on the practice of share repurchases as a regular dividend policy?

7. What effect do share repurchases (undertaken as part of the firm's dividend decision) have on the value of the firm?

8. You are the holder of common stock in the G. Lewis Apartment Renovation Company. Historically, the firm has paid generous cash dividends. The firm has recently announced that it would replace its cash dividend with a 20 percent annual stock dividend. Is this good news, bad news, or is it impossible to tell from the information provided? Explain the reason for your answer.

9. What issues of business ethics may be involved in the establishment of a firm's dividend payment amounts?

10. What role do most practitioners think dividend policy plays in determining share values?

11. How can the passive residual view of dividend policy be reconciled with the tendency of most firms to maintain a constant or steadily growing dividend payment record?

Reference no: EM13927272

Questions Cloud

Determining the issue of debt securities : 1) Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when
What is meant by the signaling effects of dividend policy : Explain what is meant by the clientele effect. Explain what is meant by the informational content of dividend policy. Explain what is meant by the signaling effects of dividend policy.
Importance of innovation in your selected business vision : Write a 1,400- to 1,750-word paper in which you explain the importance of innovation in your selected business's vision, mission, and values, and determine your business model for this new division. Include the following:
Integrated marketing communications : Select a Fortune 500 company and research their Integrated Marketing Communications (IMC) tactics. Select at least one traditional and one digital venue to research the IMC tactics.
What is the value of a stock dividend to a shareholder : Why do many firms choose to issue stock dividends? What is the value of a stock dividend to a shareholder? What are the tax limitations on the practice of share repurchases as a regular dividend policy?
Describe ethics of social media : are working towards an agreement on the meaning of "Do Not Track."
Mba overview and effective research : Use the MBA Overview and Effective Research and Writing at University of Phoenix Modules you reviewed to complete this assignment. Write a paper that analyzes the role of a manager within the functional areas of business:
Positive combination of functional expertise : Question 1: Members of __________ can solve problems with a positive combination of functional expertise and integrative or total systems thinking.
Deals with collection, classification, analysis : It is the science that deals with collection, classification, analysis, and interpretation of information or data. It is the process used to assign numbers to variables of individual population units.

Reviews

Write a Review

Financial Management Questions & Answers

  Briefly describe bankruptcy law

Briefly describe bankruptcy law. If a firm were to default on its bonds, would the company be liquidated immediately? Would the bondholders be assured of receiving all of their promised payments?

  Describe the basic characteristics of currency hedging tools

Describe the basic characteristics of currency hedging tools: forwards, futures, swaps, options and more complex options (caps, floors, collars), as well as “natural hedges” on a corporation’s balance sheet.

  Spread between treasury securities and the yield on debt

In December 1995 Boise Cascade’s stock had a beta of 0.95. The Treasury bill rate at the time was 5.8% and the Treasury bond rate was 6.4%.  Assume the term structure of interest gives a 200 bp (basis point – a basis point is 1/100 of a %) spread bet..

  Consumer confidence is a good indicator of future spending

Compare some of the numbers and charts of the previous periods of consumer confidence. Then compare past periods to up-dated or the latest reports available. Is if consumer confidence is a good indicator of future spending? Why or why not?

  What is the operating cash flow and cash flow to creditors

Weiland Co. shows the following information on its 2014 income statement: sales = $162,500; costs = $80,000; other expenses = $3,300; depreciation expense = $9,000; interest expense = $6,500; taxes = $22,295; dividends = $8,150. In addition, you're t..

  Rate of inflation compounds just like any other rate

A retirement home at Deer Trail Estates now costs $185,000. Inflation is expected to cause this price to increase at 6% annually over the next 20 years. How large an equal, annual, end of year deposit must be made each year into an account paying an ..

  Influence the effectiveness or ineffectiveness of leaders

Your analysis of how followers can influence the effectiveness or ineffectiveness of leaders Hint: Your analysis should consider how the "followers" empower or enable the leader's behaviors (for good or bad).

  What should the price of your bond be

You have a treasury bond that pays $100 one year from today and $1,100 two years from today. You notice that the yield-to-maturity on a one year-zero coupon treasury bond is 1% and the yield-to-maturity on a two year-zero coupon treasury bond is 2%. ..

  Firm a has 10000 in assets entirely financed with equity

nbsp1. firm a has 10000 in assets entirely financed with equity. firm b also has 10000 in assets but these assets are

  What is the dividend yield on watsons common stock

What is the dividend yield on Watson's common stock?

  Portfolio expected return and standard deviation

You are combining a risky asset with an investment in risk-free U.S. Treasury bills with one year to maturity. The U.S. Treasury bills offer a 4 percent rate of return. The risky asset has an expected return of 8 percent and a standard deviation of 2..

  The focus of this case is on financial strategy

Our case this semester will be Radnet, Inc.: An Acquisition. You will find the case in your coursepack that you purchased from Harvard at the beginning of this semester. The focus of this case is on financial strategy.

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