In theory, a high dividend payout policy should result for the company inALow earnings reinvestment rate and lower growth of net profitBHigh earnings reinvestment rate and lower growth of net profitCLow earnings reinvestment rate and higher growth of net profitDHigh earnings reinvestment rate and higher growth of net profit

Which one of the following statements is False:Group of answer choicesAn empirical study from Lintner (1956) finds that managers and investors seem more concerned with dividend changes than with dividend levels.The Miller and Modigliani (1961) dividend irrelevance proposition assumes no cost of issuing shares.In Australia, the majority of companies that distribute dividends do so on a quarterly basis.The way a firm chooses between paying dividends and retaining earnings is referred to as its payout policy.

Dividend policy of a firm is governed by:(i) Long Term Financing Decision:As we know that one of the financing options is ‘Equity’. Equity can either be raisedexternally through issue of new equity shares or can be generated internally throughretained earnings. For Equity, retained earnings are preferable because they do notinvolve any floatation costs (issue expenses).But whether to retain or distribute the profits, forms the basis of this decision.Further, payment of cash dividend reduces the amount of funds required to financeprofitable investment opportunities thereby restricting its financing options.In this backdrop, the decision is based on the following:1. Whether the organization has opportunities in hand to invest the profit,if retained?2. Whether the return on such investment (ROI) will be higher than theexpectations of shareholders i.e. Ke?

Dividends paid: a. decrease revenues. b. decrease equity. c. increase liability. d. increase expenses.

Dividend policies in practice vary across companies based on:a.Industry norms and competitive factorsb.Regulatory requirements and tax implicationsc.Cash flow availability and future investment opportunitiesd.All of the above

Which of the following is NOT a way that a firm can increase its dividend?a.By increasing its dividend payout rateb.By increasing its retention ratec.By increasing its earnings (net income)d.None of them.e.By decreasing its shares outstanding