Questions from Financial Management

Q: What does it mean when one states that the operating and financing

What does it mean when one states that the operating and financing decisions are separate from each other? How do we view the financing decision in terms of the magnitude of effect?

Q: Explain why M&M Proposition I in a world of no

Explain why M&M Proposition I in a world of no taxes and no bankruptcy states that the firm's value does not depend on its capital structure.

Q: Who loses out on a company’s cash flow when it adds more

Who loses out on a company’s cash flow when it adds more and more debt is added to the financing structure? Who gains as a company when more and more debt is added?

Q: Why is a dividend reinvestment program attractive to a shareholder that plans

Why is a dividend reinvestment program attractive to a shareholder that plans on increasing his or her holdings in a company?

Q: What does it mean to be a beneficiary owner of stock?

What does it mean to be a beneficiary owner of stock? Why would individuals find this ownership stake convenient?

Q: How does a stock dividend differ from a cash dividend? Is

How does a stock dividend differ from a cash dividend? Is one better than the other from the shareholder’s perspective?

Q: In a world of no taxes and no transaction costs is dividend

In a world of no taxes and no transaction costs is dividend policy relevant? Why or why not?

Q: In a world of taxes when the capital gains tax and the

In a world of taxes when the capital gains tax and the ordinary income tax rates are the same is dividend policy relevant? Why or why not?

Q: Thorpe and Company is currently an all equity firm. It has

Thorpe and Company is currently an all equity firm. It has 3 million shares selling for $28 per share. Its beta is 0.85 and the current risk-free rate is 2.5%. The expected return on the market for th...

Q: Contrast a residual dividend program with a sticky dividend program.

Contrast a residual dividend program with a sticky dividend program.