FNAN522 - Module 6 Homework Question & Answers.

Question 1 Correct Mark 1.00 out of 1.00 Question 2 Correct Mark 1.00 out of 1.00 Started on Monday, 2 December 2019, 3:15 PM State Finished Completed on Monday, 2 December 2019, 3:21 PM Time taken 5 mins 56 secs Marks 15.00/15.00 Grade 20.00 out of 20.00 (100%) A company made $10 million in revenue, recorded $2 million in net income, and paid $750,000 in dividends last year. What was the company's pay out ratio last year? Select one: a. 7.5% b. 20.0% c. 37.5% d. 2.7% In which of the following situations would a shareholder prefer to receive stock dividends as opposed to cash dividends? Select one: a. Cash dividends and stock sales are both taxed using capital gain rates. b. The investor wants to minimize the taxes due on investment income. c. The investor is looking to own shares in the company for a long period of time. d. All of these answers FNAN522-020_860- This study resource was shared via CourseH Question 3 Correct Mark 1.00 out of 1.00 Question 4 Correct Mark 1.00 out of 1.00 The Modigliani-Miller theory suggests that it doesn't matter to a shareholder whether a company issues dividends. Why might that theory not be applicable to the US stock market as it currently exists? Select one: a. Dividends and share repurchases are taxed at different rates. b. There are transaction costs associated with trading stock. c. All of these answers. d. Changes in dividend policy may indicate a change in the company's investment policy. Which of the following is a possible market reaction to an stock repurchase announcement? Select one: a. The stock price may increase because the repurchase signals that the company views the shares as currently undervalued. b. The share price may increase because the repurchase signals that the company is shifting to a higher degree of leverage to maximize returns to shareholders. c. All of these answers. d. The stock price may fall because the repurchase signals that the company's future earnings may not be as high as the market currently expects.