Question: In the problems below, you can use a risk premium of 5.5% and a tax rate of 40% if either is not specified. All work

In the problems below, you can use a risk premium of 5.5% and a tax rate of 40% if either is not specified.

All work and answers must be done/shown in an Excel Spreadsheet

2. 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

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