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NEW QUESTION: 1
A firm issues debt to repurchase equity and at the same time, experiences an increase in its profit margin.
All else equal, using the Dividend Discount Model, its stock price ________.
A. decreases
B. increases
C. is not affected
D. insufficient information given
Answer: B
Explanation:
Explanation/Reference:
Explanation:
Intuitively, it should be clear that the stock price rises since the profit margin has gone up and at the same time, the percentage of equity holders has gone down. To see this mathematically, note that the duPont system gives ROE = Profit margin * Total Asset Turnover * Financial Leverage. In the present case, the ROE increases since profit margin and Financial Leverage have both increased. The dividend growth rate, g, equals ROE*(1 - payout ratio). Hence, as ROE increases, the dividend growth rate increases with a constant payout ratio. In the Dividend Discount Model, the stock price increases as the dividend growth rate increases, all else equal.
NEW QUESTION: 2
If item A is more likely to be detected than item B which will have the highest Occurrence value?
A. item A
B. item B
C. cannot be determined
Answer: C
NEW QUESTION: 3
Anne, the security administrator, at a company has received a subpoena for the release of all the email received and sent by the company Chief Information Officer (CIO) for the past three years.
Anne is only able to find one year's worth of email records on the server and is now concerned about the possible legal implications of not complying with the request. Which of the following should Anne check
BEFORE responding to the request?
A. The company data retention policies and guidelines
B. The company backup logs and archives
C. The company data privacy policies
D. The company data retention procedures
Answer: B