Question 1

The ex-dividend date is defined as _____ business day(s)before the date of record.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 5 
E) 10 
A) 1 
B) 2 
C) 3 
D) 5 
E) 10

Question 2

The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding.   The company has announced that it is going to repurchase $4,350 worth of stock.What will the price of the stock be after this repurchase?

Accepted Answer

A) $35.00 
B) $36.19 
C) $39.21 
D) $42.50 
E) $43.33 
A) $35.00 
B) $36.19 
C) $39.21 
D) $42.50 
E) $43.33

Question 3

The Tanning Bed has 10,000 shares of stock outstanding with a par value of $1 per share and a market value of $8 per share.The balance sheet shows $10,000 in the common stock account,$60,000 in the capital in excess of par account,and $94,300 in the retained earnings account.The firm just announced a 100 percent stock dividend.What will be the value of the common stock account after the dividend?

Accepted Answer

A) $5,000 
B) $10,000 
C) $11,000 
D) $15,000 
E) $20,000 
A) $5,000 
B) $10,000 
C) $11,000 
D) $15,000 
E) $20,000

Question 4

Which one of the following statements is correct?

Accepted Answer

A) Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need. 
B) Share repurchases tend to increase agency costs. 
C) Maintaining a steady dividend is a key goal of most dividend-paying firms. 
D) Tax rates are the key factor in determining a firm's dividend policy. 
E) Stock prices tend to ignore expected changes in dividend payments. 
A) Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need. 
B) Share repurchases tend to increase agency costs. 
C) Maintaining a steady dividend is a key goal of most dividend-paying firms. 
D) Tax rates are the key factor in determining a firm's dividend policy. 
E) Stock prices tend to ignore expected changes in dividend payments.

Question 5

The market value balance sheet for Inbox Manufacturing is shown here.Inbox has declared a 15 percent stock dividend.The stock goes ex-dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend).There are 13,000 shares outstanding.What is the ex-dividend stock price?

Accepted Answer

A) $23.51 
B) $25.15 
C) $25.51 
D) $26.86 
E) $28.92 
A) $23.51 
B) $25.15 
C) $25.51 
D) $26.86 
E) $28.92

Question 6

You own 1,500 shares of stock in Avondale Corporation.You will receive a $0.80 per share dividend in one year.In two years,Avondale will pay a liquidating dividend of $35 per share.The required return on Avondale stock is 16 percent.You only want $200 total in dividends in year one and accomplish this by using homemade dividends.What will your total dividend amount be in year two?

Accepted Answer

A) $35,696 
B) $40,764 
C) $53,660 
D) $61,402 
E) $63,878 
A) $35,696 
B) $40,764 
C) $53,660 
D) $61,402 
E) $63,878

Question 7

East Coast Marina has 220,000 shares of stock outstanding.The current market value of the firm is $18.92 million.The company has retained earnings of $3.8 million,paid in surplus of $6.7 million,and a common stock account value of $220,000.The company is planning a 3-for-2 stock split.What will the market price per share be after the split?

Accepted Answer

A) $28.67 
B) $57.33 
C) $66.67 
D) $108.00 
E) $129.00 
A) $28.67 
B) $57.33 
C) $66.67 
D) $108.00 
E) $129.00

Question 8

The equity of Blooming Roses has a total market value of $16,000.Currently,the firm has excess cash of $1,400 and net income of $15,400.There are 750 shares of stock outstanding.What will be the percentage change in the stock price per share if the firm pays out all of its excess cash as a cash dividend?

Accepted Answer

A) -9.40 percent 
B) -8.75 percent 
C) -7.50 percent 
D) -2.75 percent 
E) 0.00 percent 
A) -9.40 percent 
B) -8.75 percent 
C) -7.50 percent 
D) -2.75 percent 
E) 0.00 percent

Question 9

The Olive Vase has 56,000 shares of stock outstanding with a par value of $1 per share and a market value of $11 a share.The company just announced a 3-for-4 reverse stock split.Currently,you own 500 shares of this stock.What will the total value of your shares be after the reverse stock split?

Accepted Answer

A) $3,300 
B) $4,400 
C) $5,500 
D) $5,867 
E) $6,333 
A) $3,300 
B) $4,400 
C) $5,500 
D) $5,867 
E) $6,333

Question 10

The Green Florist has 28,000 shares of stock outstanding with a par value of $1 per share and a market value of $7 a share.The company just announced a 2-for-5 reverse stock split.Currently,you own 300 shares of this stock.How many shares will you own after the reverse stock split?

Accepted Answer

A) 60 shares 
B) 120 shares 
C) 480 shares 
D) 600 shares 
E) 750 shares 
A) 60 shares 
B) 120 shares 
C) 480 shares 
D) 600 shares 
E) 750 shares

Question 11

Cooper Brands,Inc.,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Accepted Answer

A) $50.40 
B) $58.20 
C) $62.50 
D) $78.75 
E) $82.50 
A) $50.40 
B) $58.20 
C) $62.50 
D) $78.75 
E) $82.50

Question 12

Taylor's Tools declared a $0.48 per share dividend on Friday,March 7.The dividend will be paid on Monday,April 7.The ex-dividend date is Tuesday,March 18.What is the record date?

Accepted Answer

A) Friday, March 14 
B) Monday, March 17 
C) Wednesday, March 19 
D) Thursday, March 20 
E) Friday, March 21 
A) Friday, March 14 
B) Monday, March 17 
C) Wednesday, March 19 
D) Thursday, March 20 
E) Friday, March 21

Question 13

Val's Marina Supply has 3,500 shares of stock outstanding with a par value of $1.00 per share and a market value of $19 per share.The balance sheet shows $3,500 in the common stock account,$24,000 in the capital in excess of par account,and $31,400 in the retained earnings account.The firm just announced a 100 percent stock dividend.What is the value of the capital in excess of par account after the dividend?

Accepted Answer

A) $0 
B) $20,500 
C) $24,000 
D) $55,500 
E) $87,000 
A) $0 
B) $20,500 
C) $24,000 
D) $55,500 
E) $87,000

Question 14

Jean's Warehouse has 16,000 shares of stock outstanding.The current market value of the firm is $768,000.The company has retained earnings of $130,000,paid in surplus of $321,000,and a common stock account value of 16,000.The company is planning a 5-for-3 stock split.What will the retained earnings account value be after the split?

Accepted Answer

A) $73,800 
B) $130,000 
C) $153,600 
D) $205,000 
E) $245,500 
A) $73,800 
B) $130,000 
C) $153,600 
D) $205,000 
E) $245,500

Question 15

South Shore Limited has 21,000 shares of stock outstanding with a par value of $1 per share and a market price of $7.50 a share.The firm just announced a 5-for-2 stock split.What will the par value of the stock be after the split?

Accepted Answer

A) $0.40 
B) $0.80 
C) $1.00 
D) $1.40 
E) $1.60 
A) $0.40 
B) $0.80 
C) $1.00 
D) $1.40 
E) $1.60

Question 16

The common stock of Pierson Enterprises has historically had a high dividend yield and is expected to continue to do so.As a result,the majority of its shareholders are individuals and entities that are seeking a regular source of cash income.Most of these shareholders pay either no taxes or a relatively low amount of taxes.The fact that most of these shareholders have similar characteristics is referred to by which one of the following terms?

Accepted Answer

A) information content effect 
B) clientele effect 
C) efficient markets hypothesis 
D) distribution effect 
E) market reaction effect 
A) information content effect 
B) clientele effect 
C) efficient markets hypothesis 
D) distribution effect 
E) market reaction effect

Question 17

The common stock of Checkers,Inc.is selling for $56 a share and the par value per share is $1.Currently,the firm has a total market value of $812,000.How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?

Accepted Answer

A) 9,667 shares 
B) 12,500 shares 
C) 14,500 shares 
D) 17,750 shares 
E) 21,750 shares 
A) 9,667 shares 
B) 12,500 shares 
C) 14,500 shares 
D) 17,750 shares 
E) 21,750 shares

Question 18

Which of the following shareholders tend to favor a high dividend policy?
I.retired individuals
II.endowment funds
III.corporate investors
IV.investors with high dividend tax rates but low capital gains tax rates

Accepted Answer

A) I and III only 
B) II and IV only 
C) I, II, and III only 
D) II, III, and IV only 
E) I, II, III, and IV 
A) I and III only 
B) II and IV only 
C) I, II, and III only 
D) II, III, and IV only 
E) I, II, III, and IV

Question 19

Sligo Minerals stock is currently trading at $6 a share.The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares.The firm should consider a:

Accepted Answer

A) reverse stock split. 
B) liquidating dividend. 
C) stock dividend. 
D) stock split. 
E) special dividend. 
A) reverse stock split. 
B) liquidating dividend. 
C) stock dividend. 
D) stock split. 
E) special dividend.

Question 20

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently,the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

Accepted Answer

A) 4,800 shares 
B) 9,600 shares 
C) 18,000 shares 
D) 36,000 shares 
E) 32,200 shares 
A) 4,800 shares 
B) 9,600 shares 
C) 18,000 shares 
D) 36,000 shares 
E) 32,200 shares

The ex-dividend date is defined as _____ business day(s)before the date of record.

The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding. The company has announced that it is going to repurchase $4,350 worth of stock.What will the price of the stock be after this repurchase?

Which one of the following statements is correct?

The Olive Vase has 56,000 shares of stock outstanding with a par value of $1 per share and a market value of $11 a share.The company just announced a 3-for-4 reverse stock split.Currently,you own 500 shares of this stock.What will the total value of your shares be after the reverse stock split?

The Green Florist has 28,000 shares of stock outstanding with a par value of $1 per share and a market value of $7 a share.The company just announced a 2-for-5 reverse stock split.Currently,you own 300 shares of this stock.How many shares will you own after the reverse stock split?

Cooper Brands,Inc.,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Taylor's Tools declared a $0.48 per share dividend on Friday,March 7.The dividend will be paid on Monday,April 7.The ex-dividend date is Tuesday,March 18.What is the record date?

South Shore Limited has 21,000 shares of stock outstanding with a par value of $1 per share and a market price of $7.50 a share.The firm just announced a 5-for-2 stock split.What will the par value of the stock be after the split?

The common stock of Checkers,Inc.is selling for $56 a share and the par value per share is $1.Currently,the firm has a total market value of $812,000.How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?

Which of the following shareholders tend to favor a high dividend policy? I.retired individuals II.endowment funds III.corporate investors IV.investors with high dividend tax rates but low capital gains tax rates

Sligo Minerals stock is currently trading at $6 a share.The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares.The firm should consider a:

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently,the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters

Exam 17: Dividends and Payout Policy

The ex-dividend date is defined as _____ business day(s)before the date of record.

The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding. The company has announced that it is going to repurchase $4,350 worth of stock.What will the price of the stock be after this repurchase?

Which one of the following statements is correct?

The Olive Vase has 56,000 shares of stock outstanding with a par value of $1 per share and a market value of $11 a share.The company just announced a 3-for-4 reverse stock split.Currently,you own 500 shares of this stock.What will the total value of your shares be after the reverse stock split?

The Green Florist has 28,000 shares of stock outstanding with a par value of $1 per share and a market value of $7 a share.The company just announced a 2-for-5 reverse stock split.Currently,you own 300 shares of this stock.How many shares will you own after the reverse stock split?

Cooper Brands,Inc.,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Taylor's Tools declared a $0.48 per share dividend on Friday,March 7.The dividend will be paid on Monday,April 7.The ex-dividend date is Tuesday,March 18.What is the record date?

South Shore Limited has 21,000 shares of stock outstanding with a par value of $1 per share and a market price of $7.50 a share.The firm just announced a 5-for-2 stock split.What will the par value of the stock be after the split?

The common stock of Checkers,Inc.is selling for $56 a share and the par value per share is $1.Currently,the firm has a total market value of $812,000.How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?

Which of the following shareholders tend to favor a high dividend policy? I.retired individuals II.endowment funds III.corporate investors IV.investors with high dividend tax rates but low capital gains tax rates

Sligo Minerals stock is currently trading at $6 a share.The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares.The firm should consider a:

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently,the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters