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Finance_13
Dividend Policy and Internal Financing
Question | Answer |
---|---|
The amount of dividends relative to the company's net income or earnings per share. | Dividend Payout Rate |
Dividend Irrelevance View | |
"High Dividends are Best" View | |
Low Dividends are Best" View | |
A company's dividend payment should equal the cash left after financing all the investments that have positive net present values. | Residual Dividend Theory |
The belief that individuals and institutions that need current income will invest in companies that have high dividend payout.s | Clientele Effect |
Information Effect | |
The difference in accessibility to information between managers and investors, which may result in a lower stock rock than would be true in conditions of certainty. | Information Asymmetry |
Costs associated with potential conflict between managers and investors when these two groups are not the same. | Agency Costs |
No matter what the decision area, how the market price responds to management's actions is not determined entirely by the action itself. | Expectations Theory |
A dividend payment policy in which the percentage of earnings paid out in dividends is held constant. The dollar amount fluctuates from year to year as profits vary. | Constant Dividend Payout Ratio |
A dividend policy that maintains a relatively stable dollar dividend per share over time. | Stable Dollar Dividend Policy |
A corporate policy of paying a small regular dollar dividend plus a year-end extra dividend in prosperous years to avoid the connotation of a permanent divided. | Small, Regular Dividend Plus a Year-End Extra |
Increasing Stream Policy | |
The date upon which a divided is formally declared by the board of directors. | Declaration Date |
Date at which the stock transfer books are to be closed for determining the investor to receive the next dividend payment. | Date of Record |
The date upon which stock brokerage companies have uniformly decided to terminate the right of ownership to the dividend, which is two days prior to the date of record. | Ex-Dividend Date |
The date on which the company mails a dividend check to each investor of record. | Payment Date |
A distribution of shares of up to 25 percent of the number of shares currently outstanding, issued on a pro rata basis to the current stockholders. | Stock Dividend |
A stock dividend exceeding 25 percent of the number of shares currently outstanding. | Stock Split |
The repurchase of common stock by the issuing firm for any other variety of reasons, resulting in reduction of shares outstanding. | Stock Repurchase |
A formal offer by the company to buy a specified number of shares at a predetermined and stated price. The tender price is set above the current market price in order to attract sellers. | Tender Offer |
Open Market Repurchase |