Answer questions

 

 

Question 1:

Please refer to the curved line in figure 14.8 on page 499 and explain the reason for the following: The line initially has an upward slope, but gradually begins to slope downward as you move further out along the horizontal axis.

Question 2:

Please explain the following statement: There are times when a cut in dividends can be a positive signal.

Question 3:

Consider the Dividend Irrelevance Theory and explain the following: Generally speaking, why is there an inverse relationship between dividends and the potential for growth?

Question 4:

Consider the Bird in the Hand Theory and explain the following: Why are dividends less risky than pursuing growth opportunities?

Question 5:

Go over equations 14.1, 14.1a, 14.2 and 14.2a in the textbook. Please note that I am referring to the equations in the narrative of the chapter and not the end of chapter problems. Also, you do not have to include this question as part of the HW submission.