Question 1

A two-for-one stock split is like a 200% stock dividend.

Accepted Answer

A) True 
 B)False

Question 2

A 100% stock dividend results in a doubling of the number of outstanding shares,but they do not affect the company's assets,profits,or total value.

Accepted Answer

A) True 
 B)False

Question 3

Anyone holding a stock before its ex-dividend date is entitled to the dividend.

Accepted Answer

A) True 
 B)False

Question 4

Global Inc.'s shares are selling for $36 per share.Determine the new price per share,if the company a 4 for 6 reverse stock split.

Accepted Answer

A)  $54 
B)  $44 
C)  $34 
D)  $24 
A)  $54 
B)  $44 
C)  $34 
D)  $24

Question 5

Corporations pay regular cash dividends to their:

Accepted Answer

A)  common shareholders. 
B)  preferred bondholders. 
C)  fixed-rate bondholders. 
D)  convertible bondholders. 
A)  common shareholders. 
B)  preferred bondholders. 
C)  fixed-rate bondholders. 
D)  convertible bondholders.

Question 6

Managers have been characterized as reluctant to increase dividends if:

Accepted Answer

A)  dividends were increased in the preceding year. 
B)  earnings have permanently increased. 
C)  the dividend increase cannot be sustained. 
D)  the dividend payout ratio exceeds 20%. 
A)  dividends were increased in the preceding year. 
B)  earnings have permanently increased. 
C)  the dividend increase cannot be sustained. 
D)  the dividend payout ratio exceeds 20%.

Question 7

A company may choose to repurchase stock rather than pay out dividends when:

Accepted Answer

A)  the company wants to distribute excess cash to its investors. 
B)  the company wants to give its investors a bumper dividend. 
C)  the company does not want to make a commitment to distribute more cash. 
D)  the company does not want to embark on unprofitable ventures. 
A)  the company wants to distribute excess cash to its investors. 
B)  the company wants to give its investors a bumper dividend. 
C)  the company does not want to make a commitment to distribute more cash. 
D)  the company does not want to embark on unprofitable ventures.

Question 8

A stock split and/or a stock dividend will result in an:

Accepted Answer

A)  increase in the number of shares outstanding. 
B)  increase in the market value of the firm. 
C)  increase in the total assets of the firm. 
D)  increase in both the number of shares outstanding and the total assets of the firm. 
A)  increase in the number of shares outstanding. 
B)  increase in the market value of the firm. 
C)  increase in the total assets of the firm. 
D)  increase in both the number of shares outstanding and the total assets of the firm.

Question 9

Xian Inc.has 7,000,000 shares outstanding.If the company declares a 3 for 2 reverse stock split,determine the number of shares outstanding afterwards.

Accepted Answer

A)  10,050,000 
B)  10,080,000 
C)  10,200,000 
D)  10,220,000 
A)  10,050,000 
B)  10,080,000 
C)  10,200,000 
D)  10,220,000

Question 10

Capital gains may be preferred by investors over dividends even if their tax rates are equal because:

Accepted Answer

A)  taxes on dividends are withheld from paycheques. 
B)  taxes on capital gains are paid annually. 
C)  taxes on capital gains can be timed. 
D)  after-tax dividends are less certain than capital gains. 
A)  taxes on dividends are withheld from paycheques. 
B)  taxes on capital gains are paid annually. 
C)  taxes on capital gains can be timed. 
D)  after-tax dividends are less certain than capital gains.

Question 11

List several advantages and disadvantages of dividend reinvestment plans and stock repurchase plans.

Accepted Answer

Some advantages include:
> Savings to in

Question 12

A dividend does not accompany stocks that are purchased on the ex-dividend date.

Accepted Answer

A) True 
 B)False

Question 13

With respect to the dividend-payment process,the price of a share of stock can logically be expected to drop on:

Accepted Answer

A)  the payment date. 
B)  the date of record. 
C)  the ex-dividend date. 
D)  the declaration date. 
A)  the payment date. 
B)  the date of record. 
C)  the ex-dividend date. 
D)  the declaration date.

Question 14

Which of the following is the order in which key dividend dates occur:

Accepted Answer

A)  declaration, with-dividend, record, ex-dividend, payment. 
B)  declaration, with-dividend, ex-dividend, record, payment. 
C)  record, declaration, with-dividend, payment, ex-dividend. 
D)  with-dividend, ex-dividend, record, declaration, payment. 
A)  declaration, with-dividend, record, ex-dividend, payment. 
B)  declaration, with-dividend, ex-dividend, record, payment. 
C)  record, declaration, with-dividend, payment, ex-dividend. 
D)  with-dividend, ex-dividend, record, declaration, payment.

Question 15

When a company expects to maintain its dividend payments in the future,it will issue:

Accepted Answer

A)  regular dividends. 
B)  special dividends. 
C)  stock dividends. 
D)  extra dividends. 
A)  regular dividends. 
B)  special dividends. 
C)  stock dividends. 
D)  extra dividends.

Question 16

Which of the following statements is correct about investors in Ajax Industries,which has just announced a three-for-one stock split?

Accepted Answer

A)  investors will triple their wealth after the split 
B)  investors' wealth will fall by two-thirds after the split 
C)  %age of ownership increases for the investors 
D)  earnings per share will fall by two-thirds after the split 
A)  investors will triple their wealth after the split 
B)  investors' wealth will fall by two-thirds after the split 
C)  %age of ownership increases for the investors 
D)  earnings per share will fall by two-thirds after the split

Question 17

How will your investment in Acme Corp.change if you currently own 100 shares valued at $10 each and Acme has just declared a 10% stock dividend? Before the stock dividend there were 2,000 shares outstanding.

Accepted Answer

Before the stock dividend your ownership

Question 18

A dividend clientele effect assumes that:

Accepted Answer

A)  investors prefer higher rather than lower dividends. 
B)  shareholders are indifferent regarding dividends. 
C)  investors have specific dividend preferences. 
D)  investors are making "homemade" dividends. 
A)  investors prefer higher rather than lower dividends. 
B)  shareholders are indifferent regarding dividends. 
C)  investors have specific dividend preferences. 
D)  investors are making "homemade" dividends.

Question 19

High dividends may be used as __________ of a firm's __________.

Accepted Answer

A)  an indicator; high capital gains 
B)  an indicator; tax liability 
C)  a signal; return on equity 
D)  a signal; good prospects 
A)  an indicator; high capital gains 
B)  an indicator; tax liability 
C)  a signal; return on equity 
D)  a signal; good prospects

Question 20

XYZ Corp.has 1,000 shares outstanding and retained earnings of $25,000.Theoretically,what would you expect to happen to the price of their stock,currently selling for $30 per share,if a 25% stock dividend is declared?

Accepted Answer

A)  price should increase to $44.00 per share. 
B)  price should increase to $37.50 per share. 
C)  price should decrease to $24.00 per share. 
D)  nothing; price should remain at $30.00. 
A)  price should increase to $44.00 per share. 
B)  price should increase to $37.50 per share. 
C)  price should decrease to $24.00 per share. 
D)  nothing; price should remain at $30.00.

Exam 18: Payout Policy

A two-for-one stock split is like a 200% stock dividend.

A 100% stock dividend results in a doubling of the number of outstanding shares,but they do not affect the company's assets,profits,or total value.

Anyone holding a stock before its ex-dividend date is entitled to the dividend.

Global Inc.'s shares are selling for $36 per share.Determine the new price per share,if the company a 4 for 6 reverse stock split.

Corporations pay regular cash dividends to their:

Managers have been characterized as reluctant to increase dividends if:

A company may choose to repurchase stock rather than pay out dividends when:

A stock split and/or a stock dividend will result in an:

Xian Inc.has 7,000,000 shares outstanding.If the company declares a 3 for 2 reverse stock split,determine the number of shares outstanding afterwards.

Capital gains may be preferred by investors over dividends even if their tax rates are equal because:

List several advantages and disadvantages of dividend reinvestment plans and stock repurchase plans.

A dividend does not accompany stocks that are purchased on the ex-dividend date.

With respect to the dividend-payment process,the price of a share of stock can logically be expected to drop on:

Which of the following is the order in which key dividend dates occur:

When a company expects to maintain its dividend payments in the future,it will issue:

Which of the following statements is correct about investors in Ajax Industries,which has just announced a three-for-one stock split?

How will your investment in Acme Corp.change if you currently own 100 shares valued at $10 each and Acme has just declared a 10% stock dividend? Before the stock dividend there were 2,000 shares outstanding.

A dividend clientele effect assumes that:

High dividends may be used as __________ of a firm's __________.

XYZ Corp.has 1,000 shares outstanding and retained earnings of $25,000.Theoretically,what would you expect to happen to the price of their stock,currently selling for $30 per share,if a 25% stock dividend is declared?

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters

High dividends may be used as of a firm's .