SHAREHOLDERS: DIVIDENDS AND SHARE REPURCHASES (Difficulty: E = Easy‚ M = Medium‚ and T = Tough) Multiple Choice: Conceptual Easy: Dividends versus capital gains Answer: d Diff: E [i]. Myron Gordon and John Lintner believe that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that a. Investors are indifferent between dividends and capital gains. b. Investors require that the dividend yield and capital
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CORPORATE DIVIDEND PRACTICE One consideration is the desire to have a relatively stable dividend; the second is the desire to pay out‚ in the long run‚ a given fraction of earnings. This fraction is usually referred to as the payout target. These objectives may be conflicting. Earnings tend to fluctuate substantially from year to year. If a corporation routinely paid out a given fraction of those earnings as dividends‚ then the dividend itself would tend to fluctuate drastically from year to year
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(GMTC). The questions posed to you are: - 1. In theory‚ to fund an increased dividend payout or a stock buyback‚ a firm might invest less‚ borrow more‚ or issue more stock. Which of those three elements is Gainesboro’s management willing to vary‚ and which elements remain fixed as a matter of the company’s policy? 2. What happens to Gainesboro’s financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a 40% payout is pursued?
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Chapter-1. 1. Introduction: Dividend policy refers to the policy chalked out by companies regarding the amount it would pay to their shareholders as dividend. These policies shape the attitude of the investors and the financial market in general towards the concerned company. Bata is a global company with activities on five continents controlled by four Meaningful Business Units (MBU). Each of these units specializes in region-specific tasks‚ such as product development‚ purchasing‚ or marketing
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THE SETTING OF DIVIDEND POLICY Dividend policy is likely to be set in the form of a goal rather than a rigid rule‚ even though a definite policy has the advantage of providing the investor‚ or potential investor‚ a clear basis for choice. Investors knowing the dividend policy of the alternative companies can choose the type of company that best fits their individual investment goals. This is desirable‚ because stockholders differ in the extent to which they prefer dividends rather than opportunities
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Lower investment rate due to the fact that FPL probably does not raise dividends as discussed - Suggestion of dividend cuts by FPL’s managers - FPL’s stock price has fallen by 19.6% while the S&P index has decreased by 22.1% - Rising interest rate and increasing competition in electric industry From investors’ perspective‚ the current payout ratio is appropriate to some extent: - FPL’s current payout ration = cash dividend/net income = 461693/248749 = 107.7%. According to the exhibit 9‚ FPL has
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Paying out dividends belongs to the easiest way to communicate financial well-being and shareholder value‚ since they are sending out a powerful message about future prospects and performances. The willingness‚ and also the ability of companies to pay out steady dividends and maybe even to increase them‚ provides the shareholder with valuable information about the company ’s fundamentals. Wherever you are looking for information regarding dividends‚ you will find statements about their affection
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WEB APPENDIX 15A An Example: The Residual Dividend Model In the chapter we discussed the problem with strict adherence to the dividend residual model. In practice‚ companies use the residual dividend model to develop an understanding of the determinants of an optimal dividend policy‚ but they typically use a computerized financial forecasting model when setting the target payout ratio. Most larger corporations forecast financial statements over some horizon (usually 5 to 10 years). Projected
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variety of factors that impact the shape of the yield curve but monetary authorities influence greatly the shape of the yield curve .Monetary authorities influence the shape of the yield curve by initiating either a contractionary monetary policy or an expansionary monetary policy.A yield curve is a line that plots the interest rates‚ at a set point in time‚ of bonds having equal credit quality‚ but differing maturity dates. The most frequently reported yield curve compares the three-month‚ two-year‚ five-year
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Bamberg YIELD MANAGEMENT Seminar Paper Ismail Akar Faculty of Economics 1716171 akarsmail@gmail.com Price Management Prof. Dr. Björn Sven Ivens July 30‚ 2013 Table of Contents Introduction Yield management is an important form of price variation for revenue maximization‚ especially in airline and hotel businesses. When ’yield management’ is researched‚ mostly American Airlines is shown up due to the origin of yield management. The starting point for yield management
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