Question 1

Note the advantages and disadvantages of a firm's stock repurchases.

Accepted Answer

The primary advantage of a stock repurch

Question 2

Regarding dividend payment procedures,which of the following is the first day that the shares will be traded without the dividend attached?

Accepted Answer

A) Declaration date 
B) Ex-dividend date 
C) Record date 
D) Payment date 
A) Declaration date 
B) Ex-dividend date 
C) Record date 
D) Payment date

Question 3

Explain Gordon and Lintner's bird-in-the-hand theory.

Accepted Answer

This theory argues that divide

Question 4

Suppose a firm pays total dividends of $250,000 out of net income of $2 million.What would the firm's payout ratio be?

Accepted Answer

A) 0.125 
B) 0.25 
C) 1.25 
D) 8.00 
A) 0.125 
B) 0.25 
C) 1.25 
D) 8.00

Question 5

Suppose a firm has a retention ratio of 15 percent,net income of $60 million,and 15 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

A) $0.25 
B) $0.60 
C) $3.40 
D) $4.00 
A) $0.25 
B) $0.60 
C) $3.40 
D) $4.00

Question 6

On the _____________,the firm will look on its books to find the registered owners so that they can start addressing payments.

Accepted Answer

A) owner date 
B) record date 
C) owner of record date 
D) ex-dividend date 
A) owner date 
B) record date 
C) owner of record date 
D) ex-dividend date

Question 7

GBH Inc.is planning on announcing a 7-for-3 stock split.The stock is currently trading at $119 per share.Based on this information,what will be the new stock price?

Accepted Answer

A) $62.67 
B) $51.00 
C) $277.67 
D) $39.17 
A) $62.67 
B) $51.00 
C) $277.67 
D) $39.17

Question 8

Suppose that a firm always announces a yearly dividend at the end of the first quarter of the year,but then pays the dividend out as four equal quarterly payments.If the next such "annual" dividend has been announced as $1,it is exactly one quarter until the first quarterly dividend from that $1,the effective annual required rate of return on the company's stock is 10 percent,and all future "annual" dividends are expected to grow at 5 percent per year indefinitely,how much will this stock be worth?

Accepted Answer

A) $19.79 
B) $20.74 
C) $21.26 
D) $21.37 
A) $19.79 
B) $20.74 
C) $21.26 
D) $21.37

Question 9

Which of the following statements is incorrect?

Accepted Answer

A) Stock dividends increase the number of shares and increase the total market value of owner's equity. 
B) Stock splits increase the number of shares but do not increase the total market value of owner's equity. 
C) In a stock dividend, the par value of the stock on the company's books is not altered. 
D) In a stock split, the par value of the stock on the company's books is altered. 
A) Stock dividends increase the number of shares and increase the total market value of owner's equity. 
B) Stock splits increase the number of shares but do not increase the total market value of owner's equity. 
C) In a stock dividend, the par value of the stock on the company's books is not altered. 
D) In a stock split, the par value of the stock on the company's books is altered.

Question 10

As the number of days until the next dividend decreases,what will happen to the present value of the stock?

Accepted Answer

A) It will decrease. 
B) It will increase. 
C) It will stay the same. 
D) One cannot determine what will happen to the price of the stock in this situation. 
A) It will decrease. 
B) It will increase. 
C) It will stay the same. 
D) One cannot determine what will happen to the price of the stock in this situation.

Question 11

Which of the following is an offer announced publicly that specifies in advance a single purchase price,the number of shares sought,and the duration of the offer?

Accepted Answer

A) Fixed-price tender offer 
B) Fixed-duration tender offer 
C) Fixed-shares tender offer 
D) Open-market stock repurchase 
A) Fixed-price tender offer 
B) Fixed-duration tender offer 
C) Fixed-shares tender offer 
D) Open-market stock repurchase

Question 12

Regarding dividend payment procedures,which of the following is the date the firm would look on its books to find to whom they can start addressing payments?

Accepted Answer

A) Declaration date 
B) Ex-dividend date 
C) Record date 
D) Payment date 
A) Declaration date 
B) Ex-dividend date 
C) Record date 
D) Payment date

Question 13

If a firm has retained earnings of $10 million,a common shares account of $15 million,and additional paid-in-capital of $5 million,how much would be transferred in (or out)of these accounts in response to a 50 percent stock dividend,respectively?

Accepted Answer

A) -100 percent, 0 percent, +100 percent 
B) -100 percent, +100 percent, 0 percent 
C) -100 percent, +50 percent, +50 percent 
D) -50 percent, +50 percent, +50 percent 
A) -100 percent, 0 percent, +100 percent 
B) -100 percent, +100 percent, 0 percent 
C) -100 percent, +50 percent, +50 percent 
D) -50 percent, +50 percent, +50 percent

Question 14

Which of the following statements is correct?

Accepted Answer

A) Generally speaking, investors interpret a firm's decision to repurchase their own stock as a positive signal. 
B) A stock repurchase may be viewed as a sign that the firm doesn't have enough attractive capital budgeting projects. 
C) The IRS can impose penalties on a firm if tax authorities can show that the repurchase was performed primarily to avoid dividend taxation. 
D) All of these are correct. 
A) Generally speaking, investors interpret a firm's decision to repurchase their own stock as a positive signal. 
B) A stock repurchase may be viewed as a sign that the firm doesn't have enough attractive capital budgeting projects. 
C) The IRS can impose penalties on a firm if tax authorities can show that the repurchase was performed primarily to avoid dividend taxation. 
D) All of these are correct.

Question 15

MMK Cos.normally pays an annual dividend.The last such dividend paid was $2.00,all future dividends are expect to grow at a rate of 6 percent per year,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 $22 per share that is not expected to affect any other future dividends,what should the stock price be?

Accepted Answer

A) $39.63 
B) $47.88 
C) $49.02 
D) $32.71 
A) $39.63 
B) $47.88 
C) $49.02 
D) $32.71

Question 16

Suppose a firm pays total dividends of $100,000 out of net income of $1 million.What would the firm's payout ratio be?

Accepted Answer

A) 0.01 
B) 0.10 
C) 1.00 
D) 10.00 
A) 0.01 
B) 0.10 
C) 1.00 
D) 10.00

Question 17

GBH Inc.is planning on announcing a 5-for-2 stock split.The stock is currently trading at $90 per share.Based on this information,what will be the new stock price?

Accepted Answer

A) $36.00 
B) $225.00 
C) $52.00 
D) $34.00 
A) $36.00 
B) $225.00 
C) $52.00 
D) $34.00

Question 18

Brady inherited 500 shares of LNM,Inc.The stock is selling in the market for $92 per share and the company is contemplating a 5-for-3 stock split.Given this information,which of the following statements is correct?

Accepted Answer

A) Brady will have 300 shares and stock's price will be near $153.33. 
B) Brady will have 300 shares and stock's price will be near $55.20. 
C) Brady will have 833.33 shares and stock's price will be near $55.20. 
D) Brady will have 833.33 shares and stock's price will be near $153.33. 
A) Brady will have 300 shares and stock's price will be near $153.33. 
B) Brady will have 300 shares and stock's price will be near $55.20. 
C) Brady will have 833.33 shares and stock's price will be near $55.20. 
D) Brady will have 833.33 shares and stock's price will be near $153.33.

Question 19

Which of the following would cause dividends to decrease if the firm was using the residual dividend model?

Accepted Answer

A) The firm has more positive NPV projects. 
B) The firm uses less debt in its capital structure. 
C) Net income decreases. 
D) All of these would cause dividends to decrease. 
A) The firm has more positive NPV projects. 
B) The firm uses less debt in its capital structure. 
C) Net income decreases. 
D) All of these would cause dividends to decrease.

Question 20

TJ Corp.is expected to pay a dividend of $3.00 per year indefinitely.If the appropriate rate of return on this stock is 10 percent per year,and the stock consistently goes ex-dividend 45 days before dividend payment date,what will be the expected minimum price in light of the dividend payment logistics?

Accepted Answer

A) $3.70 
B) $26.68 
C) $29.65 
D) $30.00 
A) $3.70 
B) $26.68 
C) $29.65 
D) $30.00

Note the advantages and disadvantages of a firm's stock repurchases.

Regarding dividend payment procedures,which of the following is the first day that the shares will be traded without the dividend attached?

Explain Gordon and Lintner's bird-in-the-hand theory.

Suppose a firm pays total dividends of $250,000 out of net income of $2 million.What would the firm's payout ratio be?

Suppose a firm has a retention ratio of 15 percent,net income of $60 million,and 15 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

On the _____________,the firm will look on its books to find the registered owners so that they can start addressing payments.

GBH Inc.is planning on announcing a 7-for-3 stock split.The stock is currently trading at $119 per share.Based on this information,what will be the new stock price?

Which of the following statements is incorrect?

As the number of days until the next dividend decreases,what will happen to the present value of the stock?

Which of the following is an offer announced publicly that specifies in advance a single purchase price,the number of shares sought,and the duration of the offer?

Regarding dividend payment procedures,which of the following is the date the firm would look on its books to find to whom they can start addressing payments?

If a firm has retained earnings of $10 million,a common shares account of $15 million,and additional paid-in-capital of $5 million,how much would be transferred in (or out)of these accounts in response to a 50 percent stock dividend,respectively?

Which of the following statements is correct?

Suppose a firm pays total dividends of $100,000 out of net income of $1 million.What would the firm's payout ratio be?

GBH Inc.is planning on announcing a 5-for-2 stock split.The stock is currently trading at $90 per share.Based on this information,what will be the new stock price?

Brady inherited 500 shares of LNM,Inc.The stock is selling in the market for $92 per share and the company is contemplating a 5-for-3 stock split.Given this information,which of the following statements is correct?

Which of the following would cause dividends to decrease if the firm was using the residual dividend model?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

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

Note the advantages and disadvantages of a firm's stock repurchases.

Regarding dividend payment procedures,which of the following is the first day that the shares will be traded without the dividend attached?

Explain Gordon and Lintner's bird-in-the-hand theory.

Suppose a firm pays total dividends of $250,000 out of net income of $2 million.What would the firm's payout ratio be?

Suppose a firm has a retention ratio of 15 percent,net income of $60 million,and 15 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

On the _____________,the firm will look on its books to find the registered owners so that they can start addressing payments.

GBH Inc.is planning on announcing a 7-for-3 stock split.The stock is currently trading at $119 per share.Based on this information,what will be the new stock price?

Which of the following statements is incorrect?

As the number of days until the next dividend decreases,what will happen to the present value of the stock?

Which of the following is an offer announced publicly that specifies in advance a single purchase price,the number of shares sought,and the duration of the offer?

Regarding dividend payment procedures,which of the following is the date the firm would look on its books to find to whom they can start addressing payments?

If a firm has retained earnings of $10 million,a common shares account of $15 million,and additional paid-in-capital of $5 million,how much would be transferred in (or out)of these accounts in response to a 50 percent stock dividend,respectively?

Which of the following statements is correct?

Suppose a firm pays total dividends of $100,000 out of net income of $1 million.What would the firm's payout ratio be?

GBH Inc.is planning on announcing a 5-for-2 stock split.The stock is currently trading at $90 per share.Based on this information,what will be the new stock price?

Brady inherited 500 shares of LNM,Inc.The stock is selling in the market for $92 per share and the company is contemplating a 5-for-3 stock split.Given this information,which of the following statements is correct?

Which of the following would cause dividends to decrease if the firm was using the residual dividend model?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters