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 investors in different ways. using retained earnings to the extent possible. Which concept did the CFO most likely base her decision on? The residual dividend model The clientele effect The signaling hypothesis Dividend irrelevance theory Consider the case of Blue Water Producers Inc., and answer the question that follows: growth or potential investment projects. The company plans to distribute its free cash flow to its shareholders but is still 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 total assets. It maximizes the firm's return on equity. It maximizes the firm's earnings per share. Which of the following statements is true? Taxes on dividend income are paid when the stock is sold. Taxes on dividend income are paid in the year that they are received. As a result, the U.S. tax code encourages many individual investors to prefer to receive Some researchers and analysts have noticed a trend in which firms that increase their dividends see an increase in their stock price. The theory explains this phenomenon. In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their her circumstance is an illustration of: the clientele effect. the information content effect