Which of the following statements is FALSE? O a.The capital gain is the difference between the expected sale price and the purchase price of the stock O b. The sum of the dividend yield and the capital gain yield is called the total return of the stock O c. Future dividend payments and stock prices are not known with certainty, rather these values are based on the investor'sexpectations at the time the stock is purchased. We divide the capital gain by the expected future stock price to calculate the capital gain yield.O d.

Which of the following statements is FALSE?Question 7Answera.We must discount the cash flows from stock based on the equity cost of capital for the stock.b.The capital gain is the difference between the expected sale price and the purchase price of the stock.c.We divide the capital gain by the expected future stock price to calculate the capital gain yield.d.The firm might pay out cash to its shareholders in the form of a dividend.

Which of the following statements is FALSE? O a. The simplest forecast for the firm's future dividends states that they will growat a constant rate; i.e., forever. O b. We must discount the cash flows from stock based on the equity cost ofcapital for the stock. O c. The firm might pay out cash to its shareholders in the form of a dividend.O d. The dividend yield is the expected annual dividend of a stock, divided by itsexpected future sale price.

Which of the following statements is FALSE?Video: 6.C. P17-25 (Payout policy with taxes)Group of answer choicesA) Unlike with capital structure, taxes are not an important market imperfection that influence a firm's decision to pay dividends or repurchase shares.D) The optimal dividend policy when the dividend tax rate exceeds the capital gains tax rate is to pay no dividends at all.C) When the tax rate on dividends exceeds the tax rate on capital gains, shareholders will pay lower taxes if a firm uses share repurchases for all payouts rather than dividendsB) If dividends are taxed at a higher rate than capital gains, shareholders will prefer share repurchases to dividends.

Which of the following statements is FALSE?AWe should use the general dividend discount model to value the stock of a firm with rapid or changing growth.BPreference shares usually pay a fixed dividend. Valuing the preference share with the dividend discount model is essentially applying the perpetuity formula.CThe dividend discount model values the stock based on a forecast of the future dividends paid to shareholders.DThe constant dividend growth model assumes that firm's future dividends grow at a constant rate, g, forever.SUBMIT

2. Which of the following statements is FALSE?Video: 6.B. P5-16 (Payout policy with perfect markets)Group of answer choicesD) In perfect capital markets, investors are indifferent between the firm distributing funds via dividends or share repurchases. By reinvesting dividends or selling shares, they can replicate either payout method on their own.C) In perfect capital markets, an open market share repurchase has no effect on the stock price, and the stock price is the same as the ex-dividend price if a dividend were paid instead.B) In a perfect capital market, when a dividend is paid, the share price drops by the amount of the dividend when the stock begins to trade ex-dividend.A) In perfect capital markets, holding fixed the investment policy of a firm, the firm’s choice of dividend policy is irrelevant and does not affect the initial share price.