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NEW QUESTION: 1
If a firm adheres strictly to the residual dividend policy, a sale of new common stock by the company would suggest that ________.
A. the dividend payout ratio is decreasing
B. the dividend payout ratio has remained constant
C. the dividend payout ratio is increasing
D. the dollar amount of investments has decreased
E. no dividends were paid for the year
Answer: E
Explanation:
Explanation/Reference:
Explanation:
The residual dividend model is a model in which the dividend paid is set equal to the actual earnings minus the amount of retained earnings necessary to finance the firm's optimal capital budget. A firm follows 4 steps when using this model:
1. The optimal capital budget is determined.
2. The amount of equity needed to finance that budget, given its target capital structure, is determined.
3. Retained earnings are used to meet equity requirements to the extent possible.
4. Dividends are paid only if more earnings are available than are needed to support the optimal capital budget.
As long as the firm finances with the optimal mix of debt and equity, and provided it uses only internally generated equity (retained earnings), then the marginal cost of each new dollar of capital will be minimized.
Internally generated equity is available for financing some new investment, but beyond that amount, the firm must finance through more expensive common stock. At this point where new stock must be sold, the cost of equity and the marginal cost of capital, increases.

NEW QUESTION: 2
Siehe Ausstellung.

Ein Techniker hat NAT-Übersetzungen konfiguriert und überprüft, ob die Konfiguration korrekt ist.
Welche IP-Adresse ist die Quell-IP?
A. 172.23.104.4
B. 10.4.4.5
C. 172.23.103.10
D. 10.4.4.4
Answer: A

NEW QUESTION: 3

A. S822L
B. S814
C. S812L
D. S824
Answer: B