Which of the following statements is FALSE about dividend payout and growth?
A) A common approximation is to assume that in the long run, dividends will grow at a constant rate.
B) The dividend each year is the firm's earnings per share (EPS) multiplied by its dividend payout rate.
C) There is a tremendous amount of uncertainty associated with any forecast of a firm's future dividends.
D) During periods of high growth, it is not unusual for firms to pay out 100% of their earnings to shareholders in the form of dividends.
Answer: D
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Which of the following is true of dividends?
A) Dividends are a distribution of cash, stock, or other property to stockholders. B) Dividends increase assets and decrease total stockholders' equity of a corporation. C) Dividend payments decrease paid-in capital. D) Dividend payments increase stockholders' equity.
You are thinking of adding one of two investments to an already well- diversified portfolio
Security A Security B Expected Return = 14% Expected Return = 16% Standard Deviation of Standard Deviation of Returns = 16% Returns = 20% Beta = 1.2 Beta = 1.2 If you are a risk-averse investor, which one is the better choice? A) Security A B) Security B C) Security B, but only if Security B's required return is greater than 12%. D) Either security would be acceptable because they have the same beta.