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A firm's value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm's value and the investors in different ways. Suppose a firm generates a lot of cash but has limited investment opportunities. Is this stock more likely to be a utility stock or a technology stock? In addition, is the stock more likely to provide a high or low dividend yield? A technology stock that has a low dividend yield A technology stock that has a high dividend yield O A utility stock that has a low dividend yield O A utility stock that has a high dividend yield True or False: Modigliani and Miller argued that each shareholder can construct his or her own dividend policy. True False Modigliani and Miller also pointed out that many institutional investors do not pay taxes and can buy and sell stocks with very low transaction costs. For these investors, dividend policy is relevant than it is for an individual investor. less Another firm, called Lootem Power & established public utility company, has been paying dividends for the past 20 years. This year Lootem also announced that it will increase its more ds by 10%. Which class of investors is more likely to be pleased by Lootem's dividend announcement? 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

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