Which of the following statements is correct?
a. suppose a firm that has been earning $2 and paying a dividend of $1.00, or a 50% payout, announces that it is increasing the dividend to $1.50. the stock price then jumps from $20 to $30. some people would argue that this is proof that investors prefer dividends to retained earnings. miller and modigliani would agree with this argument. b. other things held constant, the higher a firm's target payout ratio, the higher its expected growth rate should be. c. miller and modigliani's dividend irrelevance theory says that the percentage of its earnings that a firm pays out in dividends has no effect on its cost of capital, but it does affect its stock price. d. the federal government sometimes taxes dividends and capital gains at different rates. other things held constant, an increase in the tax rate on dividends relative to that on capital gains would logically lead to a decrease in dividend payout ratios. e. if investors prefer firms that retain most of their earnings, then a firm that wants to maximize its stock price should set a high payout ratio.

Suppose that hubert, an economist from an am talk radio program, and kate, an economist from a nonprofit organization on the west coast, are arguing over government bailouts. the following dialogue shows an excerpt from their debate: kate: to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days. hubert: indeed, it’s gotten crazy! a government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets. kate: i don’t know about that. without a bailout of severely distressed financial firms, the economy will experience a deep recession. the disagreement between these economists is most likely due todifferences in scientific judgments . despite their differences, with which proposition are two economists chosen at random most likely to agree? business managers can raise profit more easily by reducing costs than by raising revenue. central banks should focus more on maintaining low unemployment than on maintaining low inflation. employers should not be restricted from outsourcing work to foreign nations

Suppose that a worker in agland can produce either 10 units of organic grain or 2 units of incense per year, and a worker in zenland can produce either 5 units of organic grain or 15 units of incense per year. there are 20 workers in agland and 10 workers in zenland. currently the two countries do not trade. agland produces and consumes 100 units of grain and 20 units of incense per year. zenland produces and consumes 50 units of grain and no incense per year. if each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 30 units of grain and 100 units of incense. b. 30 units of grain and 150 units of incense. c. 50 units of grain and 90 units of incense. d. 50 units of grain and 130 units of ince

Kumar consulting operates several stock investment portfolios that are used by firms for investment of pension plan assets. last year, one portfolio had a realized return of 12.6 percent and a beta coefficient of 1.15. the average t-bond rate was 7 percent and the realized rate of return on the s& p 500 was 12 percent. what was the portfolio's alpha?