fin 3403 final exam
stock dividends - Answers-increase the number of shares outstanding
According to the residual theory of dividends, - Answers-dividends should be paid only after all
investment financing needs have been met.
which of the following dividend policies will cause dividends per share to fluctuate the most? - Answers-
constant dividend payout ratio policy
According to the Modigliani-Miller (independence) hypothesis of capital structure, as the use of debt
financing increases, - Answers-the cost of capital and the cost of debt remain constant while the cost of
equity increases
There is an agency relationship between bondholders and stockholders. The agency costs that arise as a
result of this relationship - Answers-reduce the market value of the levered firm
according to the moderate view of capital structure, as the use of debt financing increases, - Answers-
there will be an optimal capital structure, but not at 100 percent debt
the objective of capital structure management is to find the capital mix that results in - Answers-
maximization of shareholder wealth and the minimization of the cost of capital
the increased variability in earnings per share due to the firms use of debt financing is measured by -
Answers-degree of financial leverage
stock dividends - Answers-increase the number of shares outstanding
According to the residual theory of dividends, - Answers-dividends should be paid only after all
investment financing needs have been met.
which of the following dividend policies will cause dividends per share to fluctuate the most? - Answers-
constant dividend payout ratio policy
According to the Modigliani-Miller (independence) hypothesis of capital structure, as the use of debt
financing increases, - Answers-the cost of capital and the cost of debt remain constant while the cost of
equity increases
There is an agency relationship between bondholders and stockholders. The agency costs that arise as a
result of this relationship - Answers-reduce the market value of the levered firm
according to the moderate view of capital structure, as the use of debt financing increases, - Answers-
there will be an optimal capital structure, but not at 100 percent debt
the objective of capital structure management is to find the capital mix that results in - Answers-
maximization of shareholder wealth and the minimization of the cost of capital
the increased variability in earnings per share due to the firms use of debt financing is measured by -
Answers-degree of financial leverage
