• Mini Case
    extra cash to pay a special one-time dividend. How will this proposal affect the stock price? How will it affect the value of the company? 2. Jessica believes that the company should use the extra cash to pay debt and upgrade and expand it existing manufacturing capability. How would Jessica’s...
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  • Notes on dividends
    shareholders. It is important to note that, all else equal, a firm that pays higher dividends is better than a firm that pays lower dividends and it should have a greater firm value. However, by dividend policy, we mean the decisions that the firm makes in the time pattern of their cash distributions to...
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  • Finance
    Forms Most companies pay a regular cash dividend each quarter,2 but occasionally this regular dividend is supplemented by a one-off extra or special dividend.3 Dividends are not always in the form of cash. Frequently companies also declare stock dividends. For example, Archer Daniels Midland has paid...
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  • Financial Management
    of regular cash dividend payments. * Signaling hypothesis:- It has been observed teat an increase in the dividend is often accompanied by an increase in the price of the stock, while a dividend cuts generally leads to a stock price decline. This could indicate that investors in the aggregate...
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  • Principles of Corporate Finance
    question of how payout policy affects shareholder value. Suppose you own stock in a corporation that has $1 per share of unneeded cash. It can hold on to the cash or it can pay an extra cash dividend of $1 per share. Does the decision matter? Your first instinct should be to say no. The dividend puts $1...
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  • New Corporate Finance
    company should use the extra cash to pay a special one-time dividend. How will this proposal affect the stock price? How will it affect the value of the company? CLOSING CASE CHAPTER 16 Dividends and Other Payouts 525 2. Jessica believes that the company should use the extra cash to pay off...
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  • • Brealey R., Myers S., Marcus A., “Fundamentals of Corporate Finance”, Mcgraw-Hill/Irwin, New York, 2007.
    out of legal capital, which is generally defined as the par value of outstanding shares.2 Most U.S. companies pay a regular cash dividend each quarter, but occasionally this is supplemented by a one-off extra or special dividend. Many companies offer shareholders automatic dividend reinvestment...
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  • Mafin
    removed an amount of cash equal to the amount of the dividend from the firm. Its total assets have declined, so its market capitalization and, in turn, the stock price should decline by this amount as well. 5. With the exception of the U.S.-based companies, firms headquartered in English common law...
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  • Financial Management
    companies pay? Cash (most common) and Stock (no real effect, issues stock div, dec stock price) Regular Dividend – create expectation that think will do well or not. When issue, stock price increases because is a sign company will do well Special Dividend – going to pay cash dividend, but no...
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  • Corporate Finance
    – It is when the company gives out extra stock to investors instead of cash dividend. viii. Dividend Reinvestment Plan (DRIP) - Some companies offer automated DRIPs. New shares are issued at, say % discount from the market price. 9.8 STOCK DIVIDENDS This involves a payment of additional shares of...
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  • Dividend Policy
    capital for the firm. No fees are charged to stockholders and many companies offer stock at a discount of 3 to 5% below the actual market price. In either type the stockholder must pay taxes on the amount of the dividend, even though stock rather than cash is received. One interesting aspect of...
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  • Electronic Timing Case Study
    1. Electronic Timing should be extremely careful in deciding to use the extra cash flow to pay a special one-time dividend because this could lead to the stock decreasing in price. If the company decides to do this I believe the value of Electronic Timing would decrease. I believe this because...
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  • Effect of Dividend Payment on Stock Prices Case Study of Nairobi Stock Exchange 20 Share Index
    dividend, as well as its average level, might be used in a dynamic setting. Other corporate distribution distributions include Extra Dividends which refers to an extra dividend to shareholders on a one time or infrequent basis. This could be as a result of a company having a good financial year. Spin...
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  • Finance and Accounting
    time is: Why do the stocks of companies that pay no dividends have positive, often quite high, values? The answer is that investors expect to sell the stock in the future at a price higher than they paid for it. Instead of dividend income plus a terminal value, they rely only on the terminal value...
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  • Study Guide
    of the stocks is precisely reflected in market prices. This means that dividend payments do not affect shareholders’ wealth. This means that dividend payments do not affect shareholders’ wealth. An example should help clarify this point. Let us assume that a company has a total of An...
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  • Cfa Notes
    Repurchases Cash dividends – repayable to shareholders in cash; has 3 forms 1. Regular dividendscompany pays out profits consistent to a schedule 2. Special dividends/extra dividend/irregular dividend – when favorable circumstances allow the firm to make one-time cash payments to...
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  • Cma Solutions
    be willing to pay for this increase in warehouse capacity? Assume that the warehouse space cannot be changed and that the Sweet Company uses the full costing method to calculate the value of its inventory. i) ii) What is the inventory value of the safety stock of sugar? Comment on this method of...
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  • Dividend
    us to rewrite much that we take for granted in corporate finance today. In particular, we believe that over time, you will see companies become more (if not entirely) equity financed, a decrease in cash balances and a dramatic surge both in the number of companies that pay dividends and in how much...
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  • Principles of Corporate Finance
    value of the company. MM model says that investors don’t need dividends to get cash, they won’t pay higher prices for the stocks with higher dividend ratio. Calculating the share price: A) dividends • 1000 shares, total market value 12000...
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  • Intermediate
    better suited for those who need a steady source of income. 2. Because of signaling effects, companies should not vary their dividends—that would lower investors’ confidence in the company and adversely affect its cost of equity and its stock price. However, cash flows vary over time, as do...
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