FNCE30002- Midterm Exam Guide - Comprehensive Notes for the exam ( 19 pages long!)
4 Oct 2017
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Discussion questions 4: payout policy: forms and influences. 11th ed: questions 2, 4, 7 and 8. 12th ed: questions 6, 17, 10 and 11. Discussion questions 4: payout policy: forms and influences - solutions. If higher than 30%, the ato will collect additional taxes at the personal level). (e) true. (f) true. The ways in which the payment of dividends may reduce agency costs are discussed in the text. Second, the payment of dividends can reduce a company"s free cash flows which might be wasted or invested unprofitably by management. This behaviour is consistent with the proposition that dividends are relevant. In particular, the behaviour suggests that managers are reluctant to reduce dividends. Possible reasons are the existence of dividend clienteles, the adverse information content of a reduction in dividends and the desire to transfer tax credits to shareholders as quickly as possible.
