T F The dividend irrelevance theory says that the firm\'s dividend policy has no

Question

1.   T        F          The dividend irrelevance theory says that the firm's dividend policy has no effect on either its value or its cost of capital.
2.   T        F          Managers, on average, do not raise dividends unless they believe future earnings will be able to sustain the higher level dividends.
3.   T        F          Firms following a constant dividend ratio payout policy will cause investors to have greater uncertainty concerning expected dividends each year when the earnings for the firm are stable over time. T            F
4.   T        F          If the information content, or signaling, hypothesis is correct, then changes in dividend policy can be important with respect to firm value and capital costs.

Explanation / Answer

1. T

2.F

3.T

4.F

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