Exam 17: Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Wheels and More,Inc.normally pays an annual dividend.The last such dividend paid was $3.00,all future dividends are expect to grow at a rate of 8 percent per year,and the firm faces a require rate of return on equity of 12 percent.If the firm just announced that the next dividend will be an extraordinary dividend of $7 per share that is not expected to affect any other future dividends,what should the stock price be?

Which of the following is an exchange of existing shares for a different (usually larger)number of "new shares," with proportionately different par and market values?

What would prompt a firm like GE to start paying out a much higher percentage of its earnings as dividends?

The first day that the shares will trade without the dividend attached is referred to as the:

JAY Corp.is expected to pay a dividend of $5.00 per year indefinitely.If the appropriate rate of return on this stock is 13 percent per year,and the stock consistently goes ex-dividend 30 days before dividend payment date,what will be the expected maximum price in light of the dividend payment logistics?

Which of the following is described as a firm buying back shares of its own stock?

Suppose a firm has a retention ratio of 55 percent and net income of $7 million.How much does it pay out in dividends?

CJ Corp.is expected to pay a dividend of $10.00 per year indefinitely.If the appropriate rate of return on this stock is 15 percent per year,and the stock consistently goes ex-dividend 25 days before dividend payment date,what will be the expected minimum price in light of the dividend payment logistics?

A firm has retained earnings of $6 million,a common shares account of $3 million,and additional paid-in-capital of $6 million,and the firm just paid a 10 percent stock dividend.Assume that fair market value is reflected in the relative size of both the common shares account and the additional paid-in-capital account.What are the new levels in each account?

If a firm has retained earnings of $20 million,a common shares account of $40 million,and additional paid-in-capital of $10 million,how much would be transferred in (or out)of these accounts in response to a 30 percent stock dividend,respectively?

A pro-rata distribution of additional shares of stock to the current owners of the stock is which of the following?

Which of the following is the date the firm sends dividends out to the shareholders?

Modigliani and Miller disagreed with the proposal by Gordon and Lintner regarding dividends.Why?

Which of the following firms is more likely to use extraordinary dividends?

Choc Hut,Inc.normally pays a quarterly dividend.The last such dividend paid was $1.50,all future quarterly dividends are expected to grow at 6 percent,and the firm faces a required rate of return on equity of 18 percent.If the firm just announced that the next dividend will be an extraordinary dividend of $5.00 per share that is not expected to affect any other future dividends,what should the stock price be?

Suppose a firm has a retention ratio of 33 percent and net income of $6.25 million.How much does it pay out in dividends?

Balloons,Inc.normally pays a quarterly dividend.The last such dividend paid was $0.80,all future quarterly dividends are expected to grow at 8 percent,and the firm faces a required rate of return on equity of 13 percent.If the firm just announced that the next dividend will be an extraordinary dividend of $2.00 per share that is not expected to affect any other future dividends,what should the stock price be?

Why might a firm announce a "reverse stock dividend"?

Which of the following is a policy of a firm paying out only funds that are left over after all positive NPV projects are funded?

Which of the following is the primary goal of a firm?