Exam 19: Dividends and Other Payouts

On June 9^th,you purchased 3,000 shares of SP stock. On July 5^th,you sold 400 shares of this stock for $21 a share. You sold an additional 400 shares on July 18^th at a price of $22.50 a share. The company declared a $.30 per share dividend on June 20^th to holders of record as of July 10^th. This dividend is payable on July 31^st. How much dividend income will you receive on July 31^st as a result of your ownership of SP stock?

Which of the following are valid reasons for a firm to reduce or eliminate its cash dividends? I. The firm is on the verge of violating a bond restriction which requires a current ratio of 1.8 or higher. II. A firm has just received a patent on a new product for which there is strong market demand and it needs the funds to bring the product to the marketplace. III. The firm can raise new capital easily at a very low cost. IV. The tax laws have recently changed such that dividends are taxed at an investor's marginal rate while capital gains are tax exempt.

Which of the following are factors that favor a high dividend policy? I. Stockholders desire for current income II. Tendency for higher stock prices for high dividend paying firms III. Investor dislike of uncertainty IV. High percentage of tax-exempt institutional stockholders

Schaeffer Shippers announced on May 1,2009,that it will pay a dividend of $5.00 per share on June 15 to all holders on record as of May 31^st. The firm's stock price is currently at $70 per share. Assume that all investors are in the 33% tax bracket. Given that the ex-dividend date is May 29,what should happen to Schaeffer's stock price on May 29?

Michael's Boating Supplies has 150,000 shares of stock outstanding with a par value of $1 per share and a market value of $10 a share. The company has retained earnings of $76,500 and capital in excess of par of $340,000. The company just announced a 1-for-5 reverse stock split. What will the market value per share be after the split?

The date on which the board of directors passes a resolution authorizing payment of a dividend to the shareholders is the _____ date.

The date on which the firm mails out its declared dividends is called the:

The information content of a dividend increase generally signals that:

The Tinslow Co. has 125,000 shares of stock outstanding at a market price of $93 a share. The company has just announced a 7-for-3 stock split. What will the market price per share be after the split?

Murphy's,Inc. has 10,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $8 per share. The balance sheet shows $32,500 in the capital in excess of par account,$10,000 in the common stock account,and $42,700 in the retained earnings account. The firm just announced a 10% (small) stock dividend. What will the balance in the retained earnings account be after the dividend?

In an efficient market,ignoring taxes and time value,the price of stock should:

You own 300 shares of Abco,Inc. stock. The company has stated that it plans on issuing a dividend of $.60 a share one year from today and then issuing a final liquidating dividend of $2.20 a share two years from today. Your required rate of return is 9%. Ignoring taxes,what is the value of one share of this stock today?

Samuel's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share. The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account,and $32,500 in the retained earnings account. The firm just announced a 50% (large) stock dividend. What is the market value per share after the dividend?

Samuel's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share. The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account and $32,500 in the retained earnings account. The firm just announced a 50% (large) stock dividend. What is the value of the capital in excess of par account after the dividend?

From a tax-paying investor's point of view,a stock repurchase:

Robinson's has 15,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $36 a share. The balance sheet shows $15,000 in the common stock account,$315,000 in the capital in excess of par account,and $189,000 in the retained earnings account. The firm just announced a 3-for-2 stock split. How many shares of stock will be outstanding after the split?

Murphy's,Inc. has 10,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $8 per share. The balance sheet shows $32,500 in the capital in excess of par account,$10,000 in the common stock account and $42,700 in the retained earnings account. The firm just announced a 10% (small) stock dividend. What will the market price per share be after the dividend?

Priscilla owns 500 shares of Delta stock. It is January 1,2006,and the company recently issued a statement that it will pay a $1.00 per share dividend on December 31,2006 and a $.50 per share dividend on December 31,2007. Priscilla does not want any dividend this year but does want as much dividend income as possible next year. Her required return on this stock is 12%. Ignoring taxes,what will Priscilla's homemade dividend per share be in 2007?

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

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