Exam 17: Payout Policy

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According to the MM dividend irrelevance proposition,since investors do not need dividends to convert their shares to cash,they will not pay higher prices for firms with higher dividend payouts.

(True/False)

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Question 41

In a three-for-two stock split,each investor would receive one additional share for each two shares already held.

(True/False)

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Question 42

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

(True/False)

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Question 43

You currently own 200 shares of stock valued at $6 per share.If the firm declares a 1-for-4 reverse stock dividend you will own __ shares valued at _ per share.

(Multiple Choice)

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Question 44

The most common way that companies buy back their stock is to buy it in the market just like any other investor.

(True/False)

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Question 45

An unlevered firm expects to generate and payout free cash flows of $120,000 annually in the form of dividends and share repurchases starting next year.The discount rate is 13% and there are 125,000 shares outstanding.What is the current value per share?

(Multiple Choice)

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Question 46

Which one of these parties is most likely to prefer a stock with a high-dividend payout policy?

(Multiple Choice)

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Question 47

A share repurchase is said to be equivalent to the payment of a cash dividend because each strategy:

(Multiple Choice)

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Question 48

Which of the following is not a way to repurchase stock?

(Multiple Choice)

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Question 49

Dividends are paid to all shareholders who are recorded in its books on the payment date.

(True/False)

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Question 50

A stock goes ex-dividend:

(Multiple Choice)

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Question 51

A corporation that has an automatic reinvestment plan:

(Multiple Choice)

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Question 52

Dividend changes are typically viewed by investors as signals of future changes in:

(Multiple Choice)

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Question 53

Q Corp has decided to pay out an extra $1 million to shareholder,while keeping investment policy and capital structure constant.Which statement is false?

(Multiple Choice)

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Question 54

You purchased a stock today.What should you expect if the stock goes ex-dividend tomorrow?

(Multiple Choice)

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Question 55

Over the past 30 years stock repurchases have become an increasingly popular way of paying out cash.

(True/False)

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Question 56

Automatic dividend reinvestment plans allow firms to:

(Multiple Choice)

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Question 57

Stocks that are purchased on the record date are not entitled to the dividend.

(True/False)

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Question 58

An investor buys a stock today for $26,receives a dividend of $2 at the end of the year and then sells the stock for $30.If the dividend is taxed at 40% and the capital gain at 20%,what is his return after tax?

(Multiple Choice)

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Question 59

Three of the following considerations may suggest that the firm should start paying out cash to its shareholders.Which one is not a relevant consideration?

(Multiple Choice)

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Question 60

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Exam 17: Payout Policy

According to the MM dividend irrelevance proposition,since investors do not need dividends to convert their shares to cash,they will not pay higher prices for firms with higher dividend payouts.

In a three-for-two stock split,each investor would receive one additional share for each two shares already held.

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

You currently own 200 shares of stock valued at $6 per share.If the firm declares a 1-for-4 reverse stock dividend you will own ____ shares valued at ___ per share.

The most common way that companies buy back their stock is to buy it in the market just like any other investor.

An unlevered firm expects to generate and payout free cash flows of $120,000 annually in the form of dividends and share repurchases starting next year.The discount rate is 13% and there are 125,000 shares outstanding.What is the current value per share?

Which one of these parties is most likely to prefer a stock with a high-dividend payout policy?

A share repurchase is said to be equivalent to the payment of a cash dividend because each strategy:

Which of the following is not a way to repurchase stock?

Dividends are paid to all shareholders who are recorded in its books on the payment date.

A stock goes ex-dividend:

A corporation that has an automatic reinvestment plan:

Dividend changes are typically viewed by investors as signals of future changes in:

Q Corp has decided to pay out an extra $1 million to shareholder,while keeping investment policy and capital structure constant.Which statement is false?

You purchased a stock today.What should you expect if the stock goes ex-dividend tomorrow?

Over the past 30 years stock repurchases have become an increasingly popular way of paying out cash.

Automatic dividend reinvestment plans allow firms to:

Stocks that are purchased on the record date are not entitled to the dividend.

An investor buys a stock today for $26,receives a dividend of $2 at the end of the year and then sells the stock for $30.If the dividend is taxed at 40% and the capital gain at 20%,what is his return after tax?

Three of the following considerations may suggest that the firm should start paying out cash to its shareholders.Which one is not a relevant consideration?

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 Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers,Acquisitions,and Corporate Control

International Financial Management

Options

Risk Management

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You currently own 200 shares of stock valued at $6 per share.If the firm declares a 1-for-4 reverse stock dividend you will own __ shares valued at _ per share.