WACC & Payout policy

Cost of Capital refers to:

• flotation cost

• dividend

• required rate of return of shareholders

• none of them

Which of the following usually has the highest cost of capital?

• equity shares

• loans

• bonds

• preferred stocks

. In case the firm is all-equity financed, WACC would be equal to:

• Cost of debt

• Cost of equity

• all of them

• none of them

When a firm decides to repurchases its own shares, then the number of outstanding shares..

• Increase

• Decrease

• remain the same

) When a company repurchases its own stocks, the number of outstanding shares increase.

• True

• False

The after-tax cost of debt is generally more expensive than the before-tax cost of debt

• True

• False

Stock dividend is

• A form of payment for shareholders using additional shares of the firm itself

• A form of payment to shareholders using additional shares of a subsidiary company of the firm

• A form of cash dividend for shareholders

Which is the correct order for these dates….

• Declaration date, Record date, Ex-Dividend date, Distribution date.

• Declaration date, Distribution date, Ex-dividend date, Record date

• Declaration date, Ex- dividend date, Record date, Payable date

• Record date, Declaration date, Ex-dividend date, Payable date

The declaration of a high dividend is a Negative sign to the market

• true

• false

A debt equity ratio of 1,5 implies…

• for every 0,5 collected in debt there is 1 collected through equity

• for every 1,5 collected in debt there is 1 collected through equity

• for every 1 collected in debt there is 1,5 collected through equity

• for every 1 collected in debt there is 0,5 collected through equity