A firm's value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm's value and the itnvestors in different ways. Some analysts have argued that a firm's value should solely be determined by its basic earning power and the business nsk of the firm. Which of these concepts would suppoet these analysts' argument? The cientele eflect The residual dividend model Dividend irreidaynse theory The signaling hypothesis Blue Water Producers inc. is an ol dnilling company and has some free cash flow that is not expected to be used to finance future growth or potential investment projects. The company plans to distribute its free cash flow to its shareholders but is still deciding whether the distribution should take the form of a stock repurchase or the payment of a cash dividend. Which of the following is a characteristic of a firm's optimal dividend policy? It maximizes the firm's stock price. It maximizes the firm's earnings per share. It maximizen the firm's total assets. It maximizes the firm's return on equity. Which of the following statements is true? Faxes on dividend income are paid in the year that they are received. Taxes on dividend income sre paid when the stock is sold. As a retult, the U.S. tax code encourages many individual investors to prefer to receive also announced that it will increase its dividends by 10%5. Which class of investors is more likely to be pleased by Lootem's dividend annduncement? Investors with high tax rates who dont depend on current devidend income foe living expenses Investors with low tax mates who depend on current dividend income for living expensos A. firm's dividend polioy determunes its durrent clientele of ivvestors