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.In Australia, the majority of companies that distribute dividends do so on a quarterly basis.The Miller and Modigliani (1961) dividend irrelevance proposition assumes no cost of issuing shares.The way a firm chooses between paying dividends and retaining earnings is referred to as its payout policy.

The bird-in-hand theory of dividend policy suggests that investors prefer:a.Higher dividends today rather than uncertain capital gains in the futureb.Lower dividends today in exchange for potential capital gains in the futurec.Dividends paid in the form of additional shares rather than cashd.Dividends paid irregularly based on company performance

The Modigliani-Miller (MM) hypothesis suggests that:a.Dividend policy has no impact on the value of a firmb.High dividend payouts increase the value of a firmc.Low dividend payouts increase the value of a firmd.Dividend policy is determined by market forces

Dividends paid: Group of answer choices increase assets. increase expenses. decrease revenues. decrease retained earnings.

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?

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