1. Dividend policy Aa Aa A firm's value deperds on its expected free cash flow and its cost of capital, Distributions made in the form of dlvicends or stock repuchases impact the firm's va ue and the investors in diffe rent ways. savvy Cemel Trucking Company's OFO has stated that the firm wl pay d vidends only if acceptable casital budgeting opportun ties do not exist. Wh ch concept did the CFO most likely base her decision on? The signaling hypotvesis O Dividand irrelevance theory O The free cash flow hypothesis The clientele errect Suppose a frm generatas a lot of cash but has limited Investment opportunities. Is th s stock mora likely to be a ut lity stock or a technology stock? In addltion, is the stock more likely to provide a high or low d vidend yield? O A tecinology stock that has a low dividend yield O A uti ity stock that has a low dividend yied O A utility stock that has a high dividend yield O A technology stock that has a high divicand yield Modigliani and Miller argued that each shareholder can construct his or her own dividend poliey. Thi atatement is O False O True Modigliani and Miller also pointed out that many institutional Investors do hot pay taxes and can buy and sell stocks with very low transaction costs. For these investors, dividend policy is Investor relevant than it is for an Individual Some researchers and analysts have noticed a trend in which firms that increase their dividends see an Increase in their stock prics. The theory of explains this phenomenon In some cases, analysts not ce that groups of similar invastors tend to fock to stocks that have divideand policies cons stent with their needs. This circumstance is an ilustration of O The clientele erect O The information content effect