Question 1

The amount of dividend that can be paid to shareholders:

Accepted Answer

A) depends on how profitable a business is and on the current assets of the business. 
B) is limited to the amount of current period profits. 
C) is limited to the amount of current period profits and accumulated profits. 
D) is limited to the amount of current period profits,accumulated profits and paid up capital. 
A) depends on how profitable a business is and on the current assets of the business. 
B) is limited to the amount of current period profits. 
C) is limited to the amount of current period profits and accumulated profits. 
D) is limited to the amount of current period profits,accumulated profits and paid up capital.

Question 2

Under the Modigliani and Miller dividend irrelevance argument,a company's value:

Accepted Answer

A) is independent of its dividend policy. 
B) is dependent on its dividend policy. 
C) and investment policies are mutually exclusive. 
D) and investment policies are independent. 
A) is independent of its dividend policy. 
B) is dependent on its dividend policy. 
C) and investment policies are mutually exclusive. 
D) and investment policies are independent.

Question 3

Which of the following statements best represents the 'bird in the hand' argument?

Accepted Answer

A) Debt increases share price. 
B) A company's share price will decrease if dividends are reduced now,in order to increase the growth in future profits and dividends. 
C) Investors are indifferent between a dollar of dividends compared to the capital gains expected from a dollar of retained profits. 
D) Expected capital gains are seen as uncertain because their eventual realisation depends on the returns from risky initial investments. 
A) Debt increases share price. 
B) A company's share price will decrease if dividends are reduced now,in order to increase the growth in future profits and dividends. 
C) Investors are indifferent between a dollar of dividends compared to the capital gains expected from a dollar of retained profits. 
D) Expected capital gains are seen as uncertain because their eventual realisation depends on the returns from risky initial investments.

Question 4

To be entitled to receive a dividend,an investor must purchase shares:

Accepted Answer

A) before the ex-dividend date. 
B) after the ex-dividend date. 
C) after the ex-dividend date but before the 'books closing' date. 
D) before the ex-dividend date but before the 'books closing' date. 
A) before the ex-dividend date. 
B) after the ex-dividend date. 
C) after the ex-dividend date but before the 'books closing' date. 
D) before the ex-dividend date but before the 'books closing' date.

Question 5

A reason why management may have a long-term dividend payout ratio is that:

Accepted Answer

A) investors have a long-term investment horizon. 
B) the present value of taxes paid on future dividend income is less than the present value of taxes paid on current dividend income. 
C) management views dividends as a function of sustainable profits. 
D) it assists management in long-term planning. 
A) investors have a long-term investment horizon. 
B) the present value of taxes paid on future dividend income is less than the present value of taxes paid on current dividend income. 
C) management views dividends as a function of sustainable profits. 
D) it assists management in long-term planning.

Question 6

Which of the following is an unlikely reason as to why a company would not pay a high franked dividend payout ratio?

Accepted Answer

A) Shareholders may be tax-exempt. 
B) It is running short of cash to finance new investments. 
C) Shareholders may not be residents. 
D) Shareholders are on the same marginal tax rate as the company. 
A) Shareholders may be tax-exempt. 
B) It is running short of cash to finance new investments. 
C) Shareholders may not be residents. 
D) Shareholders are on the same marginal tax rate as the company.

Question 7

A reason why shareholders may prefer dividend income to expected capital gains is because:

Accepted Answer

A) of the 'bird in the hand' argument. 
B) shareholders who require current income can always sell a portion of their portfolio. 
C) transaction costs such as brokerage fees make selling shares less attractive. 
D) they distrust future projections. 
A) of the 'bird in the hand' argument. 
B) shareholders who require current income can always sell a portion of their portfolio. 
C) transaction costs such as brokerage fees make selling shares less attractive. 
D) they distrust future projections.

Question 8

A __________ share buyback is a type of buyback where offers are made to only some of the shareholders in a company.

Accepted Answer

The answer of A __________ share buyback is a type...

Question 9

Kangaroo Ltd had a closing share price of $15 the day before shares in the company began trading on an ex-dividend basis.The dividend is 60 cents per share,fully franked at the company tax rate of 30 per cent.Assuming franking credits are fully valued,the expected ex-dividend share price is $14.14.

Accepted Answer

A) True 
 B)False

Question 10

The Modigliani and Miller dividend irrelevance argument does not rest on the assumption that:

Accepted Answer

A) investors are not indifferent between dividend income and capital gain income. 
B) a firm's investment decision is independent of its dividend policy. 
C) the costs of acquiring information of a firm's dividend policy are zero. 
D) there are no taxes. 
A) investors are not indifferent between dividend income and capital gain income. 
B) a firm's investment decision is independent of its dividend policy. 
C) the costs of acquiring information of a firm's dividend policy are zero. 
D) there are no taxes.

Question 11

A dividend ___________ is a class of investors who have a particular preference towards a certain dividend policy.

Accepted Answer

The answer of A dividend ___________ is a class of...

Question 12

Dividend-payout ratio can be best defined as:

Accepted Answer

A) percentage of profits used by a company to buy back its own shares. 
B) percentage of profits paid out as dividends to shareholders. 
C) percentage of profits paid out as dividends to debtholders. 
D) none of the given options. 
A) percentage of profits used by a company to buy back its own shares. 
B) percentage of profits paid out as dividends to shareholders. 
C) percentage of profits paid out as dividends to debtholders. 
D) none of the given options.

Question 13

A share buyback:

Accepted Answer

A) could be used by management to signal that shares are not overvalued. 
B) is an indication that the company has good investment opportunities,thus leading to an increase in the share price. 
C) has the same tax treatment as dividend. 
D) none of the given options apply. 
A) could be used by management to signal that shares are not overvalued. 
B) is an indication that the company has good investment opportunities,thus leading to an increase in the share price. 
C) has the same tax treatment as dividend. 
D) none of the given options apply.

The amount of dividend that can be paid to shareholders:

Under the Modigliani and Miller dividend irrelevance argument,a company's value:

Which of the following statements best represents the 'bird in the hand' argument?

To be entitled to receive a dividend,an investor must purchase shares:

A reason why management may have a long-term dividend payout ratio is that:

Which of the following is an unlikely reason as to why a company would not pay a high franked dividend payout ratio?

A reason why shareholders may prefer dividend income to expected capital gains is because:

A __________ share buyback is a type of buyback where offers are made to only some of the shareholders in a company.

Kangaroo Ltd had a closing share price of $15 the day before shares in the company began trading on an ex-dividend basis.The dividend is 60 cents per share,fully franked at the company tax rate of 30 per cent.Assuming franking credits are fully valued,the expected ex-dividend share price is $14.14.

The Modigliani and Miller dividend irrelevance argument does not rest on the assumption that:

A dividend ___________ is a class of investors who have a particular preference towards a certain dividend policy.

Dividend-payout ratio can be best defined as:

A share buyback:

Introduction

Consumption, Investment and the Capital Market

The Time Value of Money: An Introduction to Financial Mathematics

Applying the Time Value of Money to Security Valuation

Project Evaluation: Principles and Methods

The Application of Project Evaluation Methods

Risk and Return

The Capital Market

Sources of Finance: Equity

Sources of Finance: Debt

Principles of Capital Structure

Capital Structure Decisions

The Cost of Capital and Taxation Issues in Project Evaluation

Leasing and Other Equipment Finance

Capital Market Efficiency

Futures Contracts

Options and Contingent Claims

Analysis of Takeovers

International Financial Management

Management of Short-Term Assets: Inventory

Management of Short-Term Assets: Liquid Assets and Accounts Receivable

Filters

Exam 11: Payout Policy

The amount of dividend that can be paid to shareholders:

Under the Modigliani and Miller dividend irrelevance argument,a company's value:

Which of the following statements best represents the 'bird in the hand' argument?

To be entitled to receive a dividend,an investor must purchase shares:

A reason why management may have a long-term dividend payout ratio is that:

Which of the following is an unlikely reason as to why a company would not pay a high franked dividend payout ratio?

A reason why shareholders may prefer dividend income to expected capital gains is because:

A __________ share buyback is a type of buyback where offers are made to only some of the shareholders in a company.

Kangaroo Ltd had a closing share price of $15 the day before shares in the company began trading on an ex-dividend basis.The dividend is 60 cents per share,fully franked at the company tax rate of 30 per cent.Assuming franking credits are fully valued,the expected ex-dividend share price is $14.14.

The Modigliani and Miller dividend irrelevance argument does not rest on the assumption that:

A dividend ___________ is a class of investors who have a particular preference towards a certain dividend policy.

Dividend-payout ratio can be best defined as:

A share buyback:

Introduction

Consumption, Investment and the Capital Market

The Time Value of Money: An Introduction to Financial Mathematics

Applying the Time Value of Money to Security Valuation

Project Evaluation: Principles and Methods

The Application of Project Evaluation Methods

Risk and Return

The Capital Market

Sources of Finance: Equity

Sources of Finance: Debt

Principles of Capital Structure

Capital Structure Decisions

The Cost of Capital and Taxation Issues in Project Evaluation

Leasing and Other Equipment Finance

Capital Market Efficiency

Futures Contracts

Options and Contingent Claims

Analysis of Takeovers

International Financial Management

Management of Short-Term Assets: Inventory

Management of Short-Term Assets: Liquid Assets and Accounts Receivable

Filters