Question 1

All else equal,the market value of a stock will tend to decrease by roughly the amount of the

Accepted Answer

A) pretax dividend amount on the ex-dividend date. 
B) aftertax dividend amount on the ex-dividend date. 
C) pretax dividend amount on the declaration date. 
D) pretax dividend amount on the date of payment. 
E) aftertax dividend amount on the date of payment. 
A) pretax dividend amount on the ex-dividend date. 
B) aftertax dividend amount on the ex-dividend date. 
C) pretax dividend amount on the declaration date. 
D) pretax dividend amount on the date of payment. 
E) aftertax dividend amount on the date of payment.

Question 2

Edie's has 14,500 shares of stock outstanding with a par value of $1 per share and a market value of $5.80 a share.What type of stock split would be best if the stock's proper trading range centers on $16 a share?

Accepted Answer

A) Stock split of eight-for-three 
B) Stock split of eleven-for-four 
C) Reverse stock split of three-for-one 
D) Reverse stock split of three-for-eight 
E) Reverse stock split of four-for-eleven 
A) Stock split of eight-for-three 
B) Stock split of eleven-for-four 
C) Reverse stock split of three-for-one 
D) Reverse stock split of three-for-eight 
E) Reverse stock split of four-for-eleven

Question 3

A cash payment made by a firm to its owners in the normal course of business is called a(n)

Accepted Answer

A) share repurchase. 
B) liquidating dividend. 
C) special dividend. 
D) regular cash dividend. 
E) extra cash dividend. 
A) share repurchase. 
B) liquidating dividend. 
C) special dividend. 
D) regular cash dividend. 
E) extra cash dividend.

Question 4

The highest and lowest prices at which a stock has traded over a period of time is called its

Accepted Answer

A) bid-ask spread. 
B) average price. 
C) closing price. 
D) opening price. 
E) trading range. 
A) bid-ask spread. 
B) average price. 
C) closing price. 
D) opening price. 
E) trading range.

Question 5

Alicia purchased 100 shares of GT stock on Wednesday,July 7th.Nick purchased 100 shares of GT stock on Thursday,July 8th.GT declared a dividend on June 20th to shareholders of record on July 12th and payable on August 1st.Which one of the following statements concerning the dividend paid on August 1st is correct given this information?

Accepted Answer

A) Neither Alicia nor Nick are entitled to the dividend. 
B) Nick is entitled to the dividend but Alicia is not. 
C) Alicia is entitled to the dividend but Nick is not. 
D) Both Alicia and Nick are entitled to the dividend. 
E) Both Alicia and Nick are entitled to a pro rata share of the dividend. 
A) Neither Alicia nor Nick are entitled to the dividend. 
B) Nick is entitled to the dividend but Alicia is not. 
C) Alicia is entitled to the dividend but Nick is not. 
D) Both Alicia and Nick are entitled to the dividend. 
E) Both Alicia and Nick are entitled to a pro rata share of the dividend.

Question 6

Which one of these increases a firm's number of shares outstanding without changing its owners' equity?

Accepted Answer

A) Share repurchase 
B) Tender offer 
C) Special dividend 
D) Stock split 
E) Liquidating dividend 
A) Share repurchase 
B) Tender offer 
C) Special dividend 
D) Stock split 
E) Liquidating dividend

Question 7

Eisley's has a market value equal to its book value,excess cash of $528,other assets of $13,900,and equity of $9,900.The firm has 600 shares of stock outstanding and net income of $1,450.Assume the firm uses all of its excess cash for a stock repurchase.What will the price per share be after the repurchase?

Accepted Answer

A) $16.50 
B) $17.80 
C) $18.00 
D) $15.90 
E) $17.67 
A) $16.50 
B) $17.80 
C) $18.00 
D) $15.90 
E) $17.67

Question 8

Assume the stockholders of GPO stock are in the 15 percent tax bracket.The closing price of the stock today was $32.09 a share.The firm pays a quarterly dividend of $1.20 per share.What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

Accepted Answer

A) $32.09 
B) $30.71 
C) $32.14 
D) $27.61 
E) $31.07 
A) $32.09 
B) $30.71 
C) $32.14 
D) $27.61 
E) $31.07

Question 9

Jensen's has 18,000 shares of stock outstanding with a par value of $1 per share and a market price of $32.30 a share.The balance sheet shows $18,000 in the common stock account,$109,600 in the capital in excess of par value account,and $78,200 in the retained earnings account.The firm just announced a stock split of five-for-three.What will be the balance in the capital in excess of par value account after the split?

Accepted Answer

A) $138,700 
B) $94,560 
C) $458,200 
D) $109,600 
E) $458,440 
A) $138,700 
B) $94,560 
C) $458,200 
D) $109,600 
E) $458,440

Question 10

Litner's model supports the belief that

Accepted Answer

A) dividends are decreasing in importance. 
B) corporations smooth dividends. 
C) dividends tend to be more volatile than earnings. 
D) dividend increases tend to lead earnings increases. 
E) dividends and earnings rise and fall in sync with each other. 
A) dividends are decreasing in importance. 
B) corporations smooth dividends. 
C) dividends tend to be more volatile than earnings. 
D) dividend increases tend to lead earnings increases. 
E) dividends and earnings rise and fall in sync with each other.

Question 11

AJ's has 12,400 shares of stock outstanding with a par value of $1 per share and a market price of $31 a share.The balance sheet shows $12,400 in the common stock account,$67,200 in the capital in excess of par value account,and $59,300 in the retained earnings account.The firm just announced an upcoming five-for-four stock split.What will be the value of the common stock account after the split?

Accepted Answer

A) $9,920 
B) $12,500 
C) $15,500 
D) $12,400 
E) $15,000 
A) $9,920 
B) $12,500 
C) $15,500 
D) $12,400 
E) $15,000

Question 12

Observation and research shows that

Accepted Answer

A) dividends have almost been eliminated due to increased stock repurchases. 
B) during the year 1979,about two-thirds of dividends were paid to individuals with a marginal tax rate of 15 percent or less. 
C) the largest corporations have been holding their dividends constant over the last 20 years. 
D) for the period 1980 to 2012,aggregate dividends averaged about 30 percent of aggregate earnings. 
E) the percentage of corporations paying dividends has increased since the Year 2002. 
A) dividends have almost been eliminated due to increased stock repurchases. 
B) during the year 1979,about two-thirds of dividends were paid to individuals with a marginal tax rate of 15 percent or less. 
C) the largest corporations have been holding their dividends constant over the last 20 years. 
D) for the period 1980 to 2012,aggregate dividends averaged about 30 percent of aggregate earnings. 
E) the percentage of corporations paying dividends has increased since the Year 2002.

Question 13

If all clientele groups are currently satisfied,then

Accepted Answer

A) all future cash dividends should be in the form of stock dividends. 
B) changes in a single company's dividend policy will have no effect on the company's market value. 
C) companies can increase their market value by increasing their current dividends. 
D) all future cash distributions should be in the form of stock repurchases. 
E) all investors are taxed equally on their dividend income and capital gains. 
A) all future cash dividends should be in the form of stock dividends. 
B) changes in a single company's dividend policy will have no effect on the company's market value. 
C) companies can increase their market value by increasing their current dividends. 
D) all future cash distributions should be in the form of stock repurchases. 
E) all investors are taxed equally on their dividend income and capital gains.

Question 14

Payments made by a firm to its owners from sources other than current or accumulated earnings are called

Accepted Answer

A) distributions. 
B) interest payments. 
C) share repurchases. 
D) payments-in-kind. 
E) stock splits. 
A) distributions. 
B) interest payments. 
C) share repurchases. 
D) payments-in-kind. 
E) stock splits.

Question 15

Which one of these actions is most apt to affect the total value of a stockholder's investment in the firm?

Accepted Answer

A) Enacting a two-for-one stock split 
B) Forgoing a positive NPV project in order to increase the dividend amount 
C) Paying a special dividend 
D) Enacting a five-for-three reverse stock split 
E) Repurchasing shares 
A) Enacting a two-for-one stock split 
B) Forgoing a positive NPV project in order to increase the dividend amount 
C) Paying a special dividend 
D) Enacting a five-for-three reverse stock split 
E) Repurchasing shares

Question 16

A sensible payout policy

Accepted Answer

A) sets dividends at a level just equal to the amount of new equity that can be raised annually. 
B) sets dividends based on net income,not cash flows. 
C) consistently varies its target payout ratio on an annual basis. 
D) pays out all free cash flows over time. 
E) cuts positive NPV investments,if needed,to steadily increase its dividend. 
A) sets dividends at a level just equal to the amount of new equity that can be raised annually. 
B) sets dividends based on net income,not cash flows. 
C) consistently varies its target payout ratio on an annual basis. 
D) pays out all free cash flows over time. 
E) cuts positive NPV investments,if needed,to steadily increase its dividend.

Question 17

Men's Place has 21,000 shares of stock outstanding with a par value of $1 per share and a market value of $27.18 per share.The balance sheet shows $21,000 in the common stock account,$187,600 in the capital in excess of par value account,and $218,200 in the retained earnings account.The firm just announced a large stock dividend of 35 percent.What is the market value per share after the dividend?

Accepted Answer

A) $27.18 
B) $20.13 
C) $20.25 
D) $19.50 
E) $19.67 
A) $27.18 
B) $20.13 
C) $20.25 
D) $19.50 
E) $19.67

Question 18

Which one of the following is an argument in favor of a low dividend policy?

Accepted Answer

A) Few,if any,positive net present value projects are available to the firm. 
B) Only the gain on a sale of stock is taxed. 
C) Agency costs 
D) Investor desire for current income 
E) Lack of investor self-control 
A) Few,if any,positive net present value projects are available to the firm. 
B) Only the gain on a sale of stock is taxed. 
C) Agency costs 
D) Investor desire for current income 
E) Lack of investor self-control

Question 19

Auto Supply has 54,200 shares of stock outstanding with a par value of $1 per share and a market value of $6.20 a share.The company just announced a two-for-nine reverse stock split.What will be the par value per share after the split?

Accepted Answer

A) $)22 
B) $)44 
C) $1.00 
D) $2.50 
E) $4.50 
A) $)22 
B) $)44 
C) $1.00 
D) $2.50 
E) $4.50

Question 20

Behavioral finance supports the

Accepted Answer

A) replacement of cash dividends with stock dividends. 
B) simultaneous payment of cash dividends along with stock repurchases. 
C) payment of dividends rather than stock repurchases. 
D) movement to end cash dividends and just have investors buy and sell shares to meet their cash needs. 
E) increased use of stock splits rather than the distribution of cash in any form. 
A) replacement of cash dividends with stock dividends. 
B) simultaneous payment of cash dividends along with stock repurchases. 
C) payment of dividends rather than stock repurchases. 
D) movement to end cash dividends and just have investors buy and sell shares to meet their cash needs. 
E) increased use of stock splits rather than the distribution of cash in any form.

All else equal,the market value of a stock will tend to decrease by roughly the amount of the

Edie's has 14,500 shares of stock outstanding with a par value of $1 per share and a market value of $5.80 a share.What type of stock split would be best if the stock's proper trading range centers on $16 a share?

A cash payment made by a firm to its owners in the normal course of business is called a(n)

The highest and lowest prices at which a stock has traded over a period of time is called its

Which one of these increases a firm's number of shares outstanding without changing its owners' equity?

Assume the stockholders of GPO stock are in the 15 percent tax bracket.The closing price of the stock today was $32.09 a share.The firm pays a quarterly dividend of $1.20 per share.What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

Litner's model supports the belief that

Observation and research shows that

If all clientele groups are currently satisfied,then

Payments made by a firm to its owners from sources other than current or accumulated earnings are called

Which one of these actions is most apt to affect the total value of a stockholder's investment in the firm?

A sensible payout policy

Which one of the following is an argument in favor of a low dividend policy?

Auto Supply has 54,200 shares of stock outstanding with a par value of $1 per share and a market value of $6.20 a share.The company just announced a two-for-nine reverse stock split.What will be the par value per share after the split?

Behavioral finance supports the

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Risk Amcq Return: Lessons From Market History

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

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Exam 16: Dividemcqs AMCQ Other Payouts

All else equal,the market value of a stock will tend to decrease by roughly the amount of the

Edie's has 14,500 shares of stock outstanding with a par value of $1 per share and a market value of $5.80 a share.What type of stock split would be best if the stock's proper trading range centers on $16 a share?

A cash payment made by a firm to its owners in the normal course of business is called a(n)

The highest and lowest prices at which a stock has traded over a period of time is called its

Which one of these increases a firm's number of shares outstanding without changing its owners' equity?

Assume the stockholders of GPO stock are in the 15 percent tax bracket.The closing price of the stock today was $32.09 a share.The firm pays a quarterly dividend of $1.20 per share.What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

Litner's model supports the belief that

Observation and research shows that

If all clientele groups are currently satisfied,then

Payments made by a firm to its owners from sources other than current or accumulated earnings are called

Which one of these actions is most apt to affect the total value of a stockholder's investment in the firm?

A sensible payout policy

Which one of the following is an argument in favor of a low dividend policy?

Auto Supply has 54,200 shares of stock outstanding with a par value of $1 per share and a market value of $6.20 a share.The company just announced a two-for-nine reverse stock split.What will be the par value per share after the split?

Behavioral finance supports the

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Risk Amcq Return: Lessons From Market History

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

Filters