Happy Whale Shipbuilders's CFO has stated that the firm will pay dividends only after all acceptable capital budgeting projects have been financed using retained earnings to the extent possible. Which concept did the CFO most likely base her decision on? O O The residual dividend model The signaling hypothesis Dividend irrelevance theory The clientele effect Consider the case of Red Dirt Producers Inc., and answer the question that follows: Red Dirt Producers Inc. is an oil-drilling company. The company paid a dividend of $3.10 last year, and, in the past, its dividend has increased steadily by about 4% a year. Red Dirt just announced that its dividend will increase to $4.20 this year, and its share price rose from $38 per share to $40 per share immediately after the announcement. Which of the following best explains why Red Dirt's stock price increased as it did? The signaling hypothesis Dividend irrelevance theory The clientele effect Which of the following statements is true? O Taxes on dividend income are paid in the year that they are received. O Taxes on dividend income are paid when the stock is sold. As a result, the U.S. tax code encourages many individual investors to prefer to receive Another firm, called Robbem Power & Water, an established public utility company, has been paying dividends for the past 20 years. This year Robbem also announced that it will increase its dividends by 10%. Which class of investors is more likely to be pleased by Robbem's dividend announcement? O O Investors with low tax rates who depend on current dividend income for living expenses Investors with high tax rates who don't depend on current dividend income for living expenses A firm's dividend policy determines its current clientele of investors