Why should we expect a firm’s stock price to decline by approximately the amount of the dividend payment on the ex-dividend date? Why do U. S. stock prices generally fall by less than the amount of the dividend payment?
Answer to relevant QuestionsHow do average dividend payout ratios for companies headquartered in English common- law countries compare with those of companies head-quartered in civil law countries? What explains this difference? How does the fraction of NASDAQ-listed companies that pay regular cash dividends compare to the fraction of NYSE-listed firms that regularly pay dividends? What accounts for this difference? Explain the difference between a firm’s sustainable growth rate and its optimal growth rate. In what circumstances is a firm’s optimal growth rate likely to exceed its sustainable rate, and under what conditions would ...What does the firm’s cash conversion cycle represent? What is the financial manager’s goal with regard to it? Why? What general cost trade-offs are associated with the firms level of short- term financing? How do these costs behave when a firm substitutes short-term financing for long- term financing? How would you quantitatively model ...
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