Shobhit, an experienced stock broker advised his client to invest in the shares of High Rise Limited,as the company has declared high dividends since an increase in dividend is perceived as a good newsand stock prices react positively to it. Identify the related factor of dividend decision being described inthe above lines. (1)a) Tax rateb) Growth Opportunityc) Stock market conditiond) Access to capital mar

Factors affecting Dividend Decision

Explain under which conditions an increase in the dividend payment can be interpretedas a signal of good news or bad news.

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

Dividend policies can impact a company's stock price because they:a.Affect investor perceptions of the company's financial healthb.Determine the total amount of cash available for investmentc.Determine the cost of equity capitald.Influence the company's capital structure

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