lecture 2 part 2 Flashcards
1
Q
what are the types of stock price reactions to dividend announcements
A
sources of cash and uses of cash
2
Q
what are sources of cash
A
get money from
3
Q
what are uses of cash
A
money go
4
Q
what are examples of sources of cash
A
operations, issuing new shares, increasing debt
5
Q
what are examples of uses of cash
A
dividends, buying back back shares, paying debt and interest, buying assets, working capital
6
Q
why do they setup dividend payout
A
managers use dividends to distribute excess earnings and manager don’t want to surprise investors with bad news
7
Q
what are the 4 managers strict about setting a dividend payout
A
- firms don’t have long - term target payout ratios
- dividends change
- focus
- managers are reluctant
8
Q
what is stock repurcahses
A
company buys back some of its shares from existing shareholders and is not required to have excess cash
