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NEW QUESTION: 1
Which EU institution is vested with the competence to propose new data protection legislation on its own initiative?
A. The European Commission
B. The European Council
C. The Council of the European Union
D. The European Parliament
Answer: C
NEW QUESTION: 2
You are testing two new weight-gain formulas for puppies. The test gives the results:
Control group: 1% weight gain
Formula A. 3% weight gain
Formula B. 4% weight gain A one-way ANOVA returns a p-value = 0.027
What can you conclude?
A. Formula A and Formula B are both effective at promoting weight gain.
B. Either Formula A or Formula B is effective at promoting weight gain.
C. Formula B is more effective at promoting weight gain than Formula A.
D. Formula A and Formula B are about equally effective at promoting weight gain.
Answer: B
NEW QUESTION: 3
If you were to argue that the firm's cost of equity increases as the dividend payout decreases, you would be making an argument ________ with MM's dividend irrelevance theory, and ________ with Gordon and Lintner's "bird-in-the-hand" theory.
A. inconsistent; consistent
B. consistent; inconsistent
C. consistent; consistent
D. inconsistent; inconsistent
E. the argument does not make sense; neither theory involves the cost of equity capital
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The main conclusion of MM's irrelevance theory is that dividend policy does not affect the required rate of return on equity. Gordon-Lintner disagreed stating that k(s) decreases as the dividend payout is increased because investors are less certain of receiving the capital gains which should result from retaining earnings than they are of receiving dividends. They said that investors value expected dividends more highly than expected capital gains because the dividend yield is less risky than the growth component in the total expected return equation, k(s) = D1/Po + g. MM disagreed and theorized that k(s) is independent of dividend policy, implying that investors are indifferent between dividends and capital gains. MM called the Gordon-Lintner's study the bird-in-the- hand fallacy, because MM thought the riskiness of the firm's cash flows to investors in the long run is determined by the riskiness of the operating cash flows, not by dividend policy.
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