Question 1

The date on which the firm mails out its declared dividends is called the

Accepted Answer

A)  ex-dividend date.
B)  ex-rights date.
C)  date of payment.
D)  date of record.
E)  declaration date.F) A) and D)
G) A) and E)

Question 2

New Built wants to repurchase 15,000 of its shares at $32 a share through a tender offer.Shareholders responded by offering 18,500 shares.Assume you are a shareholder and offered your 400 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

Accepted Answer

A)  0 shares
B)  400 shares
C)  348 shares
D)  324 shares
E)  279 sharesF) B) and C)
G) A) and B)

Question 3

Jensen's has 18,000 shares of stock outstanding with a par value of $1 per share and a market price of $32.30 a share.The balance sheet shows $18,000 in the common stock account,$109,600 in the capital in excess of par value account,and $78,200 in the retained earnings account.The firm just announced a stock split of five-for-three.What will be the balance in the capital in excess of par value account after the split?

Accepted Answer

A)  $138,700
B)  $94,560
C)  $458,200
D)  $109,600
E)  $458,440F) D) and E)
G) A) and D)

Question 4

In a reverse stock split,

Accepted Answer

A)  the number of shares outstanding increases and owners' equity decreases.
B)  the number of shares outstanding decreases but owners' equity is unchanged.
C)  shareholders make a cash payment to the firm.
D)  the firm buys back existing shares of stock on the open market.
E)  the firm sells new shares of stock on the open market.F) A) and B)
G) D) and E)

Question 5

Luis owns 300 shares of a stock that plans to pay a special $4.65 per share dividend 1 year from today and a final $.32 per share dividend 2 years from today.He does not desire any dividend income in 2 years but wants all of his dividends in 1 year.He can borrow and lend at 9 percent.Ignoring taxes,what will be his total homemade dividend in 1 year?

Accepted Answer

A)  $1,306.93
B)  $1,491.00
C)  $1,208.15
D)  $1,616.55
E)  $1,845.15F) A) and B)
G) A) and E)

Question 6

Agency costs provide justification for

Accepted Answer

A)  higher dividends over lower dividends.
B)  stock repurchases over cash dividends.
C)  stock splits rather the stock repurchases.
D)  issuing shares rather than repurchasing shares.
E)  stock dividends over cash dividends.F) B) and C)
G) None of the above

Question 7

A sensible payout policy

Accepted Answer

A)  sets dividends at a level just equal to the amount of new equity that can be raised annually.
B)  sets dividends based on net income,not cash flows.
C)  consistently varies its target payout ratio on an annual basis.
D)  pays out all free cash flows over time.
E)  cuts positive NPV investments,if needed,to steadily increase its dividend.F) B) and E)
G) B) and C)

Question 8

The Robert's Co.just paid an annual dividend of $1.49 a share.The firm has a target payout ratio of 0.38 and a speed of adjustment value of 0.7.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.87?

Accepted Answer

A)  $1.66
B)  $1.70
C)  $1.95
D)  $1.98
E)  $1.74F) B) and E)
G) A) and E)

Question 9

AJ's has 12,400 shares of stock outstanding with a par value of $1 per share and a market price of $31 a share.The balance sheet shows $12,400 in the common stock account,$67,200 in the capital in excess of par value account,and $59,300 in the retained earnings account.The firm just announced an upcoming five-for-four stock split.What will be the value of the common stock account after the split?

Accepted Answer

A)  $9,920
B)  $12,500
C)  $15,500
D)  $12,400
E)  $15,000F) C) and D)
G) A) and D)

Question 10

A ________ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

Accepted Answer

A)  merger
B)  reverse stock split
C)  payment-in-kind
D)  share repurchase
E)  stock splitF) B) and E)
G) B) and D)

Question 11

The information content of a regular dividend increase generally signals that

Accepted Answer

A)  management believes the future earnings of the firm will be strong.
B)  the firm has recently sold a subsidiary.
C)  the firm has a one-time surplus of cash.
D)  the firm has more cash than it needs due to declining sales.
E)  future dividends will be lower.F) All of the above
G) A) and D)

Question 12

How frequently do dividend-paying firms in the United States generally pay regular cash dividends?

Accepted Answer

A)  Annually
B)  Semiannually
C)  Quarterly
D)  Monthly
E)  BiannuallyF) None of the above
G) D) and E)

Question 13

Corner Mart has 130,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.40 per share.The firm just announced a small stock dividend of 15 percent.What will be the market price per share after the dividend?

Accepted Answer

A)  $32.90
B)  $33.39
C)  $38.40
D)  $41.08
E)  $44.16F) B) and D)
G) B) and C)

Question 14

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the ________ date.

Accepted Answer

A)  ex-dividend
B)  ex-rights
C)  record
D)  payment
E)  declarationF) D) and E)
G) B) and D)

Question 15

Payments made by a firm to its owners from sources other than current or accumulated earnings are called

Accepted Answer

A)  distributions.
B)  interest payments.
C)  share repurchases.
D)  payments-in-kind.
E)  stock splits.F) A) and B)
G) A) and C)

Question 16

Reverse stock splits can be used to

Accepted Answer

A)  adjust the debt-equity ratio such that it falls within a preferred range.
B)  increase the excess cash held by a firm.
C)  increase both the number of shares outstanding and the market price per share simultaneously.
D)  increase the total equity of a firm.
E)  avoid delisting.F) B) and D)
G) A) and B)

Question 17

Alicia purchased 100 shares of GT stock on Wednesday,July 7th.Nick purchased 100 shares of GT stock on Thursday,July 8th.GT declared a dividend on June 20th to shareholders of record on July 12th and payable on August 1st.Which one of the following statements concerning the dividend paid on August 1st is correct given this information?

Accepted Answer

A)  Neither Alicia nor Nick are entitled to the dividend.
B)  Nick is entitled to the dividend but Alicia is not.
C)  Alicia is entitled to the dividend but Nick is not.
D)  Both Alicia and Nick are entitled to the dividend.
E)  Both Alicia and Nick are entitled to a pro rata share of the dividend.F) A) and B)
G) A) and D)

Question 18

Which one of these actions is most apt to affect the total value of a stockholder's investment in the firm?

Accepted Answer

A)  Enacting a two-for-one stock split
B)  Forgoing a positive NPV project in order to increase the dividend amount
C)  Paying a special dividend
D)  Enacting a five-for-three reverse stock split
E)  Repurchasing sharesF) B) and D)
G) None of the above

Question 19

Which one of these statements is correct regarding large U.S.firms for the period 2004 to 2014?

Accepted Answer

A)  Common dividends outpaced share repurchases for the majority of the years during the period.
B)  Share repurchases tend to be steadier from year to year than are common dividends.
C)  Both common dividends and share repurchases were lower in 2014 than they were in 2004.
D)  Corporate earnings tend to be more volatile than either stock dividends or repurchases.
E)  Common dividends decreased more than share repurchases during the period 2008 to 2009.F) C) and D)
G) None of the above

Exam 16: Dividends and Other Payouts

Correct Answer
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Correct Answer
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The Robert's Co.just paid an annual dividend of $1.49 a share.The firm has a target payout ratio of 0.38 and a speed of adjustment value of 0.7.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.87?

Correct Answer
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Which one of these actions is most apt to affect the total value of a stockholder's investment in the firm?

Correct Answer
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Corner Mart has 130,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.40 per share.The firm just announced a small stock dividend of 15 percent.What will be the market price per share after the dividend?

Correct Answer
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New Built wants to repurchase 15,000 of its shares at $32 a share through a tender offer.Shareholders responded by offering 18,500 shares.Assume you are a shareholder and offered your 400 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

Correct Answer
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A sensible payout policy

Correct Answer
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Reverse stock splits can be used to

Correct Answer
verified

Correct Answer
verified

How frequently do dividend-paying firms in the United States generally pay regular cash dividends?

Correct Answer
verified

The information content of a regular dividend increase generally signals that

Correct Answer
verified

Agency costs provide justification for

Correct Answer
verified

In a reverse stock split,

Correct Answer
verified

The date on which the firm mails out its declared dividends is called the

Correct Answer
verified

Correct Answer
verified

A ________ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

Correct Answer
verified

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the ________ date.

Correct Answer
verified

Payments made by a firm to its owners from sources other than current or accumulated earnings are called

Correct Answer
verified

Which one of these statements is correct regarding large U.S.firms for the period 2004 to 2014?

Correct Answer
verified

Exam 16: Dividends and Other Payouts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Robert's Co.just paid an annual dividend of $1.49 a share.The firm has a target payout ratio of 0.38 and a speed of adjustment value of 0.7.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.87?

Correct AnswerverifiedShow Answer

Which one of these actions is most apt to affect the total value of a stockholder's investment in the firm?

Correct AnswerverifiedShow Answer

Corner Mart has 130,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.40 per share.The firm just announced a small stock dividend of 15 percent.What will be the market price per share after the dividend?

Correct AnswerverifiedShow Answer

New Built wants to repurchase 15,000 of its shares at $32 a share through a tender offer.Shareholders responded by offering 18,500 shares.Assume you are a shareholder and offered your 400 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

Correct AnswerverifiedShow Answer

A sensible payout policy

Correct AnswerverifiedShow Answer

Reverse stock splits can be used to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How frequently do dividend-paying firms in the United States generally pay regular cash dividends?

Correct AnswerverifiedShow Answer

The information content of a regular dividend increase generally signals that

Correct AnswerverifiedShow Answer

Agency costs provide justification for

Correct AnswerverifiedShow Answer

In a reverse stock split,

Correct AnswerverifiedShow Answer

The date on which the firm mails out its declared dividends is called the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A ________ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

Correct AnswerverifiedShow Answer

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the ________ date.

Correct AnswerverifiedShow Answer

Payments made by a firm to its owners from sources other than current or accumulated earnings are called

Correct AnswerverifiedShow Answer

Which one of these statements is correct regarding large U.S.firms for the period 2004 to 2014?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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