Exam 17: Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

________ is an exchange of existing shares for a different (usually large) number of "new" shares, with proportionally different par and market values.

Which of the following is true regarding the information effect of dividend policies?

Suppose a firm has a retention ratio of 35 percent, net income of $35 million, and 10 million shares outstanding. What would be the dividend per share paid out on the firm's stock?

Wheels and More, Inc. normally pays an annual dividend. The last such dividend paid was $3.00, all future dividends are expected to grow at a rate of 8 percent per year, and the firm faces a required rate of return on equity of 12 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $7 per share that is not expected to affect any other future dividends, what should the stock price be?

Suppose a firm has a retention ratio of 15 percent, net income of $60 million, and 15 million shares outstanding. What would be the dividend per share paid out on the firm's stock?

Why might a firm's investors wish to delay receiving cash from the firm?

Regarding dividend payment procedures, which of the following is the date the firm would look on its books to find to whom they can start addressing payments?

ABC Corp. is expected to pay a dividend of $5.00 per year indefinitely. If the appropriate rate of return on this stock is 5 percent per year, and the stock consistently goes ex-dividend 45 days before the dividend payment date, what will be the expected minimum price in light of the dividend payment logistics?

Suppose a firm has a dividend payout ratio of 42 percent and net income of $9.25 million. What would be the annual addition to retained earnings?

Sky, Inc. normally pays a annual dividend. The last such dividend paid was $2.50, all future annual dividends are expected to grow at 4 percent, and the firm faces a required rate of return on equity of 16.5 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $10.00 per share that is not expected to affect any other future dividends, what should the stock price be?

Which of the following statements is incorrect?