Exam 14: Dividends and Dividend Policy

The common stock of Tina's Tires closed at $68.25 a share today.Tomorrow morning, the stock goes ex-dividend.The dividend that is being paid this quarter is $1.56 per share.Assume the tax rate on dividends is 21 percent.All else equal, what should the opening stock price be tomorrow morning?

Your portfolio is 700 shares of Conglomerated International that currently sells for $26.50 a share.The company has announced a cash dividend of $0.45 per share with an ex-dividend date of tomorrow.Assume there are no taxes.What should you expect your portfolio value to be tomorrow morning assuming all else is held constant?

What percentage of capital gains are excluded from taxation for corporate shareholders?

Kaylor's Tool Shoppe has 8,600 shares of stock outstanding at a market price of $8 a share.Which one of the following stock splits should the firm declare if it wants to increase the stock price to exactly $36a share? Ignore any taxes or market imperfections.

Which of these is a noncash payment made by a firm to its shareholders that lessens the value of each outstanding share?

Which statement is correct?

The common stock of Woods Bowling Balls closed at $59.65 a share today.Tomorrow morning, the stock goes ex-dividend.The dividend that is being paid this quarter is $1.37 per share.Assume the tax rate on dividends is 21 percent.All else equal, what should the opening stock price be tomorrow morning?

Fried Foods recently liquidated its fast-food division.That unit represented 30 percent of the firm's overall market value.Prior to the liquidation, the firm's stock was selling for $46 a share, the annual dividend was steady at $1.20 per share, and there were 18,000 shares outstanding.The firm is preparing to distribute the entire liquidation proceeds to shareholders.How much should shareholders expect to receive per share from this liquidating dividend? Ignore taxes.

Pluto United has 14,200 shares of stock outstanding at a price per share of $23.How many shares will be outstanding if the firm does a 4-for-3 stock split?

Modern Homes just declared a 4-for-3 stock split.Which of the following occurred as a result of this split? I.Number of shares outstanding increased by one-third II.Number of shares outstanding decreased by one-fourth III.Price per share increased by one-third IV.Price per share decreased by one-fourth

Which one of the following would tend to favor a low-dividend payout?

In the US, stock dividends:

Cookies and Cream has 5,000 shares of stock outstanding at a market price of $8.29 per share.What will be the price per share after a stock dividend of 8 percent? Ignore taxes and market imperfections.

Lexington Stables just declared a 15 percent stock dividend.Which one of the following increased by 15 percent as a result of this dividend?

Which one of the following best defines a regular cash dividend?

Mercury Industries currently has 300,000 shares of stock outstanding that sell for $75 per share.Assuming no market imperfections or tax effects exist, what will be the share price after Mercury implements a 5-for-3 stock split?

Jerry Springs Company has 20,000 shares of stock outstanding at a market price of $10 a share.The current earnings per share are $0.55.The firm has total assets of $200,000 and total liabilities of $86,500.Next week, the firm will be repurchasing $25,000 worth of stock.Ignore taxes.What will be the earnings per share after the stock repurchase?

Which one of the following statements is correct?

Dixie's has a market value balance sheet as shown below.The firm currently has 2,200 shares of stock outstanding and net income of $10,500. The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend.What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.

Davidson International has 13,700 shares of stock outstanding at a price per share of $28.The firm has decided to repurchase 500 of those shares in the open market.What will the price per share be after the share repurchase is completed? Ignore taxes and market imperfections.