Dividend Policy, Hybrid and Derivative SecuritiesQuiz # 4Multiple Choice1.A dividend reinvestment plan enables stockholders to(a)reinvest the dividends in money market instruments which are risk free.(b)reinvest all dividends in the firm with no accompanying increase in equity.(c)acquire additional dividends through redemption of stock.(d)acquire shares at little or no transaction costs.
2.The residual theory of dividends suggests that dividends are _________ to the value of the firm.
3.The information content of dividends refers to
4.According to the residual theory of dividends, if the firm’s equity need exceeds the amount of retained earnings, the firm would