Which of the following is not a way that a firm can increase its dividend? A) By

Question

Which of the following is not a way that a firm can increase its dividend?


A) By increasing its earnings (net income)

B) By increasing its dividend payout rate

C) By decreasing its shares outstanding

D) By increasing its retention rate

Rearden Metals has a current stock price of $30 share, is expected to pay a dividend of $1.20 in one year, and its expected price right after paying that dividend is $33.


32) Rearden's expected dividend yield is closest to:


A) 3.40%

B) 4.20%

C) 4.00%

D) 3.65%



33)

Rearden's expected capital gains yield is closest to:


A) 6.4%

B) 8.2%

C) 4.0%

D) 10.0%



34) Nielson Motors has a share price of $25 today. If Nielson Motors is expected to pay a dividend of $0.75 this year, and its stock price is expected to grow to $26.75 at the end of the year, then Nielson's dividend yield and equity cost of capital are:


A) 4.0% and 6.0% respectively

B) 4.0% and 10.0% respectively

C) 3.0% and 10.0% respectively

D) 3.0% and 7.0% respectively


35) NoGrowth industries presently pays an annual dividend of $1.50 per share and it is expected that these dividend payments will continue indefinitely. If NoGrowth's equity cost of capital is 12%, then the value of a share of NoGrowth's stock is closest to:



A) $15.00

B) $14.00

C) $12.50

D) $10.00

Explanation / Answer

D) By increasing its retention rate

Incresing retention rattio will decrease dividends

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