Consider the choice between paying out earnings to shareholders versus retaining the earnings for investment.Which of the following assumptions must hold for dividend payout to either increase or decrease firm value,depending on whether there are positive NPV investment opportunities?
A) It assumes that dividend payments are irrelevant under all circumstances.
B) The firm will make profit every year and will pay dividends consistently.
C) There are no tax considerations.
D) Debt holders are indifferent to the choice between paying out earnings to shareholders versus retaining the earnings for investment.
Correct Answer:
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Q4: Dividend yield is the ratio of the:
A)dividend
Q5: Investors prefer retained earnings over a
Q6: In the presence of taxes,which of the
Q7: Dividend payout ratio is the ratio of
Q8: Which of the following is true of
Q10: Which of the following is an assumption
Q11: Under imputation systems:
A)dividends are tax-free and capital
Q12: Explain the Miller-Modigliani dividend irrelevancy theorem.
Q13: The tax preference for debt financing versus
Q14: In a classical tax system,_.
A)dividends are taxed
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