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Author Question: A firm that maintains a stable dollar dividend per share will generally not increase the dividend ... (Read 67 times)

Shelles

  • Hero Member
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  • Posts: 582
on: Jul 10, 2018
A firm that maintains a stable dollar dividend per share will generally not increase the dividend
  unless
 
  A) a stock split occurs.
  B) the firm merges with another profitable firm.
  C) the P/E ratio has increased steadily over the past 5 years.
  D) the firm is sure that a higher dividend level can be maintained.

Question 2

Suppose the 360-day forward exchange rate is 1.657 dollars per British pound, and the current spot
  rate is 1.625 dollars per British pound.
 
  If the 360-day interest rate in the United States is 5 and the
  360-day interest rate in Great Britain is 3, is the market in equilibrium according to the interest
  rate parity theory?
  A) No, because the forward premium on the pound is 2 while the interest rate in the United
  States is 67 higher than the interest rate in Great Britain.
  B) No, because the higher interest rate in the United States (2) implies that the forward
  exchange rate should be 2 lower than the current spot rate.
  C) Yes, because the forward premium on the pound (2) is exactly offset by the lower interest
  rate in Great Britain.
  D) Cannot be determined without knowing the amount of money being exchanged.


asware1

  • Sr. Member
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  • Posts: 318
Reply #1 on: Jul 10, 2018
Answer to Question 1

D

Answer to Question 2

C


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