Exam 13: Distribution of Retained Earnings: Dividends and Stock Repurchases

A firm following the _____ makes payment of a specific dollar dividend each year or periodically increases the dividend at a constant rate.

A_____ is an action taken by a firm to decrease the per-share price of its stock.

Amber Corp. has 3 million shares outstanding, each selling at $30. If Amber announces a 20% stock dividend, then the transfer from retained earnings is equal to _____.

A _____ effect might exist if investors are attracted to certain companies because they have particular dividend policies.

According to the free cash flow hypothesis, cash flows that cannot be reinvested in positive net present value projects should be kept as retained earnings.

Which of the following policies represents a compromise between a stable, predictable dividend and a constant payout ratio?

The distribution of earnings by a firm to stockholders by buying shares of its stock in the financial markets is known as a _____.

Which of the following is an advantage of stock repurchases?

A firm will set a low payout ratio and finance by retaining earnings rather than through the sale of new common stock when the:

Which of the following is true of the dividend reinvestment plans?

Firms following the constant payout ratio dividend policy:

Which of the following factors leads to a high dividend-payout ratio?

Which of the following statements is true about the free cash flow hypothesis?

Which of the following is an important factor that affects dividend policies of companies around the world?

If the stockholders of a firm prefer current income to future income, then the:

Dividend payments cannot exceed the balance sheet item "Retained earnings." This is known as the _____.

If the _____ is correct, there exists no optimal dividend policy, because dividend policy does not affect the value of a firm.

The dividend policy that strikes a balance between current dividends and future growth is called the:

All else equal, a normal stock split or a stock dividend:

A firm repurchases stock to distribute excess funds.