FIN 3403 Final Exam|Questions and Answers|Latest Update with Dr. Ann
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Definition
In a "perfect markets" environment, capital structure is irrelevant.
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, Expectations theory Modigliani-Miller hypothesis
Moderate hypothesis Residual dividends theory
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2 of 40
Definition
The ratio of dividends paid per share divided by the earnings per share
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Business risk Ex-dividend date
Dividend payout ratio Information asymmetry
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3 of 40
Definition
Investor reactions to a managerial decision are based on their
assessment of the effect of the action on stock price
,The announcement of a higher dividend indicates that more cash will
be received by the investors this quarter. It also signals that the firm's
future prospects have improved
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Modigliani-Miller hypothesis Expectations theory
Moderate hypothesis Residual dividends theory
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4 of 40
Definition
Cost associated with protecting bondholders
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Payment date Agency costs
Bankruptcy cost Stock repurchase
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, 5 of 40
Definition
The result of the combined effects of both operating and financial
leverage
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Payment date Fixed costs
DCL DOL
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6 of 40
Definition
If we assume perfect markets (no taxes, transaction costs, etc.)
dividends do not matter
If we pay a dividend, yield rises and capital gain decreases
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Dividend irrelevance view Dividend payout ratio
Marie Whyte|Study tips 100% Guaranteed success.
Correct 225
Incorrect 00
Next steps
Your answers
Definition
In a "perfect markets" environment, capital structure is irrelevant.
Give this one a try later!
, Expectations theory Modigliani-Miller hypothesis
Moderate hypothesis Residual dividends theory
Don't know?
2 of 40
Definition
The ratio of dividends paid per share divided by the earnings per share
Give this one a try later!
Business risk Ex-dividend date
Dividend payout ratio Information asymmetry
Don't know?
3 of 40
Definition
Investor reactions to a managerial decision are based on their
assessment of the effect of the action on stock price
,The announcement of a higher dividend indicates that more cash will
be received by the investors this quarter. It also signals that the firm's
future prospects have improved
Give this one a try later!
Modigliani-Miller hypothesis Expectations theory
Moderate hypothesis Residual dividends theory
Don't know?
4 of 40
Definition
Cost associated with protecting bondholders
Give this one a try later!
Payment date Agency costs
Bankruptcy cost Stock repurchase
Don't know?
, 5 of 40
Definition
The result of the combined effects of both operating and financial
leverage
Give this one a try later!
Payment date Fixed costs
DCL DOL
Don't know?
6 of 40
Definition
If we assume perfect markets (no taxes, transaction costs, etc.)
dividends do not matter
If we pay a dividend, yield rises and capital gain decreases
Give this one a try later!
Dividend irrelevance view Dividend payout ratio
