Exam 16: Dividend Policy

Groups of investors who prefer one distribution method over another are known as:

A reasonable conclusion about dividend policy is that management should avoid surprising investors when it comes to the firm's dividend decision.

The residual dividend theory suggests that dividends should be paid to stockholders first,and then,what is left can be reinvested by the firm.

Which of the following motivates corporations to enter into stock repurchase programs?

Which of the following considerations would be expected to influence a firm's decision regarding the payment of dividends?

If dividends and capital gains are taxed at the same rate,should investors prefer cash dividends or stock repurchases?

What is meant by "dividend clienteles"? Give specific examples.

A stable dividend policy generally leads to a lower required rate of return on the part of the investor when compared to similar stocks with erratic fluctuations in dividends.

Explain the significance of each of the following:

Five years ago,Mr.Martinez purchased 1000 shares of JPM stock at $50 per share.If Mr.Martinez ' tax rate is 25% would he prefer that the company pay a $5.00 per share dividend or offer to repurchase 100 shares at $50 per share?

What might an investor reasonably expect from a company with excess cash and few internal investment growth opportunities?

Because money has a time value investors should prefer that dividends be paid sooner rather than later.Agree or disagree.Explain your answer with a numerical example.

A firm's payout is calculated as the ratio of retained earnings to earnings before interest and taxes (EBIT).

Company managers strive to gradually increase dividend series over the long-term future.

Fred Handel owns 2000 shares of Haydn Inc.stock which is currently selling for $18 per share.If the company repurchases 10% of its outstanding shares at $18 per share and Fred chooses not to sell any shares back to the company,

Empirical evidence is conclusive that dividend policy matters.

For accounting purposes,a stock split has been defined as a stock dividend exceeding:

Georges Bizet owns 10,000 shares of Pearl Co.purchased at an average price of $15 per share.The tax rate on both dividends and capital gains is 15%.Would Bizet prefer a $2.00 per share dividend or to sell 1,000 shares back to the company at $20 per share? Compute his after-tax income from each option.

Which of the following might cause dividend policy to affect shareholder wealth?

The ex-dividend date occurs prior to the declaration date.