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NEW QUESTION: 1
A firm issues debt to repurchase equity and at the same time, experiences an increase in its profit margin.
All else equal, using the Dividend Discount Model, its stock price ________.
A. decreases
B. is not affected
C. insufficient information given
D. increases
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Intuitively, it should be clear that the stock price rises since the profit margin has gone up and at the same time, the percentage of equity holders has gone down. To see this mathematically, note that the duPont system gives ROE = Profit margin * Total Asset Turnover * Financial Leverage. In the present case, the ROE increases since profit margin and Financial Leverage have both increased. The dividend growth rate, g, equals ROE*(1 - payout ratio). Hence, as ROE increases, the dividend growth rate increases with a constant payout ratio. In the Dividend Discount Model, the stock price increases as the dividend growth rate increases, all else equal.
NEW QUESTION: 2
Which of the following has the FASTEST connection speed?
A. Cable
B. ISDN
C. Dial-Up
D. WiMAX
Answer: A
NEW QUESTION: 3
Which tool can be used to dimension MSS/MGW network elements?
A. OTOPS.
B. OTOCS.
C. Load tool.
D. PLANTSC.
Answer: B
NEW QUESTION: 4
Identify four components of the Fusion Business Intelligence Embedded Dashboard. (Choose four.)
A. Real-time chat link
B. Flexible time periods
C. Multiple currencies
D. Key Performance Indicators
E. Web conferencing link
F. Multiple data widgets
Answer: B,C,D,F