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NEW QUESTION: 1
If a firm adheres strictly to the residual dividend policy, a sale of new common stock by the company would suggest that ________.
A. the dividend payout ratio is increasing
B. no dividends were paid for the year
C. the dividend payout ratio is decreasing
D. the dollar amount of investments has decreased
E. the dividend payout ratio has remained constant
Answer: B
Explanation:
Explanation/Reference:
Explanation:
The residual dividend model is a model in which the dividend paid is set equal to the actual earnings minus the amount of retained earnings necessary to finance the firm's optimal capital budget. A firm follows 4 steps when using this model:
1. The optimal capital budget is determined.
2. The amount of equity needed to finance that budget, given its target capital structure, is determined.
3. Retained earnings are used to meet equity requirements to the extent possible.
4. Dividends are paid only if more earnings are available than are needed to support the optimal capital budget.
As long as the firm finances with the optimal mix of debt and equity, and provided it uses only internally generated equity (retained earnings), then the marginal cost of each new dollar of capital will be minimized.
Internally generated equity is available for financing some new investment, but beyond that amount, the firm must finance through more expensive common stock. At this point where new stock must be sold, the cost of equity and the marginal cost of capital, increases.

NEW QUESTION: 2
You have been preparing the latest Digital Marketing Strategy document for the Senior Management Team. In particular you have taken into account factors such as age and gender, as well as the social background of your target audience. What is the general term used to describe this? Choose one of the following:
Exhibit:

A. Segmentation Analysis
B. Personnel Development
C. Audience definition
D. Profile Specification
Answer: C
Explanation:
Explanation/Reference:
Explanation:

NEW QUESTION: 3
Which of the following is a cost of information?
A. Improving system design
B. Improving product design
C. Improving pricing strategies
D. Improving marketing strategies
Answer: A

NEW QUESTION: 4
How can you change the ID mappings in a chart of accounts after the Quality system is activated?
Response:
A. Request changes through the SAP Service Center
B. Use SAP Solution Manager
C. Set up a new client
D. Use the self-service configuration UI
Answer: A