Question: If high- dividend stocks offer a higher expected (and required) return than low- dividend stocks, due to the higher personal taxes levied on the former,

If high- offer a higher expected (and required) return than low- due to the higher personal taxes levied on the former, why don’t corporations simply reduce payments and thus lower their cost of capital?

Step by Step Solution

★★★★★

3.39 Rating (158 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

It is proposed that if highdividend stocks offer a higher expected and required return than lowd... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

453-B-C-F-D-P (138).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

Why do most income stocks offer only limited capital gains potential? Does this mean the outlook for continued profitability is also limited? Explain.

Why do bonds with lower seniority have higher yields than equivalent bonds with higher seniority?

Why does a Treasury bond offer a lower yield than a corporate bond with the same time to maturity? Could a corporate bond with a different time to maturity offer a lower yield? Explain.

a) If high-dividend stocks offer a higher expected (and required) return than low- dividend stocks due to higher personal taxes levied on the former, why dont corporations simply reduce dividend...

It is becoming widely expected that interest rates will rise in the coming year. In recent weeks the 10 year US bond has risen from about 1.50% to 1.80%. Using the appendix for chapter 2 on Webster...

this is Finance questions ! please, help me for this . thnk FINA3313-005 Homework 2 Fall 2015 FINA3313-005 Homework 2 Chapter 04 Measuring Corporate Performance True / False Questions 1. The higher...

THIS QUESTION IS DUE IN EXACTLY 1 HOUR AND 45 MINUTES. I WILL PAY EXTRA 10 DOLLARS IN TIP IF SOMEONE TYPES THE EXACT ANSWER REQUESTED. PLEASE RESPOND TO THE EACH AND EVERY QUESTION IN A TOTAL OF 3-4...

Hi, I have an Assignment for my Finance Subject. I have attached the necessary documentation here for you to view including the Lecture slides of all the Topics covered for this assignment. Please...

I need help from a Financial expert who is very familiar with exchange rate exposure & payout policy.I will adjust the price as you suggest. For some reason I am not able to do it here. Please be...

You helped me a couple of weeks ago. I was wondering if i could setup a time for tomorrow that you could be available to help me with some questions. I will pay $20 per question. They are short and I...

Suppose you purchase a Treasury bill that matures in three months. The bill is a pure discount instrument paying its face value of $100,000 at maturity. If the bill is priced to yield 1% over the...

Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost driversthe number of cruises and the number of passengersthat it uses in...

In the 1 9 5 0 ' s , became popular. were the dominant form of payment. By the 1 9 8 0 ' s 1 ) Cash, Cheques 2 ) Cash, Cards 3 ) Cheques, Cards 4 ) 1 . 0 . U ' s , Cash 5 ) Cards, Cheques

A bio-imaging laboratory has developed a new method to carry out brain scans in less than 20 min. A sample of 12 brain scan durations from the lab is given below: Suppose that the duration time...

Explain the difference between the quick ratio and the current ratio.

Calculate the cash conversion cycle (CCC) for the company examined in questions 2 to 4.

Determine the operating cycle and cash conversion cycle for a company with inventory turnover of 6.25 times per year, receivables turnover of 10 times per year, and an average days of revenues in...

Delta Airlines' flights from Denver to Atlanta are on time 90 % of the time. Suppose 10 flights are randomly selected, and the number on-time flights is recorded. Round answers to 3 significant...

The next dividend payment by im, Incorporated, will be $2.75 per share. The dividends are anticipated to maintain a growth rate of 7 percent forever. Assume the stock currently sells for $49.10 per...

Suppose that you wanted to buy a new Honda Civic and you want to wait until you can get a good deal. You want to see if the usual/average price of a Honda Civic is below the blue book value of...