Question: When firms increase dividends stock prices tend to increase One
When firms increase dividends, stock prices tend to increase. One reason given for this price reaction is that dividends operate as a positive signal. What is the increase in dividends signaling to markets? Will markets always believe the signal? Why or why not?
Answer to relevant QuestionsYou are comparing the dividend policies of three dividend paying utilities. You have collected the following information on the ex-dividend behavior of these firms. If you were a tax-exempt investor, which company ...Would your answer be different for the previous problem if JC Automobiles were a large firm followed by thirty-five analysts? Why or why not? LimeAde, a large soft drink manufacturing firm, is faced with the decision of how much to pay out as dividends to its stockholders. It expects to have a net income of $1,000 (after depreciation of $500), and it has the ...Assume that Cracker Barrel, from Problem 20, wants to continue with its policy of not paying dividends. You are the CEO of Cracker Barrel and have been confronted by dissident stockholders, demanding to know why you are not ...Vernon Enterprises has current aftertax operating income of $100 million and a cost of capital of 10%. The firm earns a return on capital equal to its cost of capital. a. Assume that the firm is instable growth, growing 5% a ...
Post your question