All of the following conclusions on the importance of a dividend policy are true EXCEPT
A) as a firm's investment opportunities increase, the dividend payout ratio should decrease.
B) in order to avoid surprising investors, management should anticipate financing needs for the
short-term, but not for the long term.
C) dividends may influence stock price by the investor's desire to minimize and/or defer taxes
and from the role of dividends in minimizing agency costs.
D) the firm's expected earning power and the riskiness of these earnings are more important to
the investor than the dividend policy.
Question 2
When you turned 20, you deposited 1,500 into an account paying interest that is compounded quarterly. You just turned 30, and there is now 2,233.30 in the account. What nominal annual interest rate is the account paying?
A) 1.00
B) 4.00
C) 4.06
D) 16.24
E) 3.75