Question 1

A ________ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

Accepted Answer

A) merger 
B) reverse stock split 
C) payment-in-kind 
D) share repurchase 
E) stock split 
A) merger 
B) reverse stock split 
C) payment-in-kind 
D) share repurchase 
E) stock split

Question 2

In a reverse stock split,

Accepted Answer

A) the number of shares outstanding increases and owners' equity decreases. 
B) the number of shares outstanding decreases but owners' equity is unchanged. 
C) shareholders make a cash payment to the firm. 
D) the firm buys back existing shares of stock on the open market. 
E) the firm sells new shares of stock on the open market. 
A) the number of shares outstanding increases and owners' equity decreases. 
B) the number of shares outstanding decreases but owners' equity is unchanged. 
C) shareholders make a cash payment to the firm. 
D) the firm buys back existing shares of stock on the open market. 
E) the firm sells new shares of stock on the open market.

Question 3

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 4

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

Accepted Answer

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

Question 5

Reverse stock splits can be used to

Accepted Answer

A) adjust the debt-equity ratio such that it falls within a preferred range. 
B) increase the excess cash held by a firm. 
C) increase both the number of shares outstanding and the market price per share simultaneously. 
D) increase the total equity of a firm. 
E) avoid delisting. 
A) adjust the debt-equity ratio such that it falls within a preferred range. 
B) increase the excess cash held by a firm. 
C) increase both the number of shares outstanding and the market price per share simultaneously. 
D) increase the total equity of a firm. 
E) avoid delisting.

Question 6

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 7

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 8

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 9

Which one of these statements is correct regarding large U.S.firms for the period 2004 to 2014?

Accepted Answer

A) Common dividends outpaced share repurchases for the majority of the years during the period. 
B) Share repurchases tend to be steadier from year to year than are common dividends. 
C) Both common dividends and share repurchases were lower in 2014 than they were in 2004. 
D) Corporate earnings tend to be more volatile than either stock dividends or repurchases. 
E) Common dividends decreased more than share repurchases during the period 2008 to 2009. 
A) Common dividends outpaced share repurchases for the majority of the years during the period. 
B) Share repurchases tend to be steadier from year to year than are common dividends. 
C) Both common dividends and share repurchases were lower in 2014 than they were in 2004. 
D) Corporate earnings tend to be more volatile than either stock dividends or repurchases. 
E) Common dividends decreased more than share repurchases during the period 2008 to 2009.

Question 10

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the ________ date.

Accepted Answer

A) ex-dividend 
B) ex-rights 
C) record 
D) payment 
E) declaration 
A) ex-dividend 
B) ex-rights 
C) record 
D) payment 
E) declaration

Question 11

Agency costs provide justification for

Accepted Answer

A) higher dividends over lower dividends. 
B) stock repurchases over cash dividends. 
C) stock splits rather the stock repurchases. 
D) issuing shares rather than repurchasing shares. 
E) stock dividends over cash dividends. 
A) higher dividends over lower dividends. 
B) stock repurchases over cash dividends. 
C) stock splits rather the stock repurchases. 
D) issuing shares rather than repurchasing shares. 
E) stock dividends over cash dividends.

Question 12

The Robert's Co.just paid an annual dividend of $1.49 a share.The firm has a target payout ratio of 0.38 and a speed of adjustment value of 0.7.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.87?

Accepted Answer

A) $1.66 
B) $1.70 
C) $1.95 
D) $1.98 
E) $1.74 
A) $1.66 
B) $1.70 
C) $1.95 
D) $1.98 
E) $1.74

Question 13

New Built wants to repurchase 15,000 of its shares at $32 a share through a tender offer.Shareholders responded by offering 18,500 shares.Assume you are a shareholder and offered your 400 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

Accepted Answer

A) 0 shares 
B) 400 shares 
C) 348 shares 
D) 324 shares 
E) 279 shares 
A) 0 shares 
B) 400 shares 
C) 348 shares 
D) 324 shares 
E) 279 shares

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

Luis owns 300 shares of a stock that plans to pay a special $4.65 per share dividend 1 year from today and a final $.32 per share dividend 2 years from today.He does not desire any dividend income in 2 years but wants all of his dividends in 1 year.He can borrow and lend at 9 percent.Ignoring taxes,what will be his total homemade dividend in 1 year?

Accepted Answer

A) $1,306.93 
B) $1,491.00 
C) $1,208.15 
D) $1,616.55 
E) $1,845.15 
A) $1,306.93 
B) $1,491.00 
C) $1,208.15 
D) $1,616.55 
E) $1,845.15

Question 16

Corner Mart has 130,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.40 per share.The firm just announced a small stock dividend of 15 percent.What will be the market price per share after the dividend?

Accepted Answer

A) $32.90 
B) $33.39 
C) $38.40 
D) $41.08 
E) $44.16 
A) $32.90 
B) $33.39 
C) $38.40 
D) $41.08 
E) $44.16

Question 17

The information content of a regular dividend increase generally signals that

Accepted Answer

A) management believes the future earnings of the firm will be strong. 
B) the firm has recently sold a subsidiary. 
C) the firm has a one-time surplus of cash. 
D) the firm has more cash than it needs due to declining sales. 
E) future dividends will be lower. 
A) management believes the future earnings of the firm will be strong. 
B) the firm has recently sold a subsidiary. 
C) the firm has a one-time surplus of cash. 
D) the firm has more cash than it needs due to declining sales. 
E) future dividends will be lower.

Question 18

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 19

How frequently do dividend-paying firms in the United States generally pay regular cash dividends?

Accepted Answer

A) Annually 
B) Semiannually 
C) Quarterly 
D) Monthly 
E) Biannually 
A) Annually 
B) Semiannually 
C) Quarterly 
D) Monthly 
E) Biannually

A ________ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

In a reverse stock split,

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

Reverse stock splits can be used to

A sensible payout policy

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

Which one of these statements is correct regarding large U.S.firms for the period 2004 to 2014?

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the ________ date.

Agency costs provide justification for

The Robert's Co.just paid an annual dividend of $1.49 a share.The firm has a target payout ratio of 0.38 and a speed of adjustment value of 0.7.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.87?

New Built wants to repurchase 15,000 of its shares at $32 a share through a tender offer.Shareholders responded by offering 18,500 shares.Assume you are a shareholder and offered your 400 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

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

Corner Mart has 130,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.40 per share.The firm just announced a small stock dividend of 15 percent.What will be the market price per share after the dividend?

The information content of a regular dividend increase generally signals that

How frequently do dividend-paying firms in the United States generally pay regular cash dividends?

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

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Exam 16: Dividends and Other Payouts

A ________ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

In a reverse stock split,

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

Reverse stock splits can be used to

A sensible payout policy

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

Which one of these statements is correct regarding large U.S.firms for the period 2004 to 2014?

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the ________ date.

Agency costs provide justification for

The Robert's Co.just paid an annual dividend of $1.49 a share.The firm has a target payout ratio of 0.38 and a speed of adjustment value of 0.7.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.87?

New Built wants to repurchase 15,000 of its shares at $32 a share through a tender offer.Shareholders responded by offering 18,500 shares.Assume you are a shareholder and offered your 400 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

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

Corner Mart has 130,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.40 per share.The firm just announced a small stock dividend of 15 percent.What will be the market price per share after the dividend?

The information content of a regular dividend increase generally signals that

How frequently do dividend-paying firms in the United States generally pay regular cash dividends?

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

Filters