Question 1

Fresh Baked Goods has 36,800 shares of stock outstanding at a market price of $24.91per share.What will be the price per share after a stock dividend of 6 percent? Ignore taxes and market imperfections.

Accepted Answer

A)  $24.90
B)  $23.50
C)  $25.00
D)  $25.31
E)  $25.40F) B) and E)
G) A) and E)

Question 2

AIW, Inc.currently has 275,000 shares of stock outstanding that sell for $87 per share.Assuming no market imperfections or tax effects exist, what will be the share price after AIW implements a 7-for-3 stock split?

Accepted Answer

A)  $37.29
B)  $39.55
C)  $36.31
D)  $29.89
E)  $32.38F) A) and E)
G) A) and D)

Question 3

Dragon Trucking just paid its annual regular cash dividend of $1.08 a share, along with a special dividend of $.12 a share.The company follows a policy of increasing its dividend by 1 percent annually.Which one of the following is the best estimate of the firm's next annual dividend payment?

Accepted Answer

A)  $1.1925
B)  $1.0908
C)  $1.2120
D)  $1.0912
E)  $1.1032F) C) and D)
G) A) and C)

Question 4

On which one of the following dates are dividend checks mailed?

Accepted Answer

A)  Date of record
B)  Ex-dividend date
C)  Payment date
D)  Declaration date
E)  Public announcement dateF) A) and D)
G) B) and D)

Question 5

Kelso's is considering spending $80,000 on either a stock repurchase or an extra cash dividend.Which one of the following values will be the same whether the firm pays a dividend or repurchases stock? Assume there are no taxes or market imperfections.

Accepted Answer

A)  Number of shares outstanding
B)  Price per share
C)  Earnings per share
D)  Price-earnings (P
E)   ratio
E)  Market value of equity per shareF) B) and C)
G) C) and D)

Question 6

Which statement is correct regarding US companies?

Accepted Answer

A)  The personal taxes of investors is the key factor managers consider when establishing a dividend policy.
B)  Firms tend to increase their regular dividend as soon as they expect increased earnings in the future.
C)  Firms tend to react quickly to lower dividends any time the economy begins to slow.
D)  Firms tend to quickly adjust their dividends to changes in the firm's P/E ratio.
E)  Procter & Gamble is one example of a firm with a long history of increasing dividends.F) B) and C)
G) None of the above

Question 7

The clientele effect states that investors fall into various groups because of differences in their preferences for which one of the following?

Accepted Answer

A)  Share price levels
B)  Risk level
C)  Short-term versus long-term investments
D)  Rates of return
E)  DividendsF) B) and E)
G) C) and D)

Question 8

KL Electronics has paid a quarterly dividend of $.42 per share for the past two years.This quarter, the firm plans to pay $.42 plus an additional $.05 per share.The firm has stated that it is uncertain whether it will pay $.42 or $.47 per share next quarter.Which one of the following is the best description of the additional $.05 that is being paid this quarter?

Accepted Answer

A)  Liquidating dividend
B)  Special dividend
C)  Extra dividend
D)  Stock dividend
E)  Normal dividendF) C) and D)
G) A) and B)

Question 9

A market value balance sheet shows cash of $91,000; fixed assets of $327,000, and equity of $418,000.There are 16,000 shares of stock outstanding.The company has declared a dividend of $.82 per share.The stock goes ex-dividend tomorrow.Ignore any tax effects.What will be the firm's market equity value after the dividend is paid?

Accepted Answer

A)  $372,020
B)  $404,880
C)  $419,560
D)  $418,000
E)  $397,810F) B) and E)
G) All of the above

Question 10

Heidi owns 400 shares of Boyd Enterprises stock, which is valued at $13 a share.Boyd Enterprises just declared a stock dividend of 4 percent.How many shares will Heidi own and what will be the price per share after the dividend?

Accepted Answer

A)  385; $12.50
B)  385; $13.00
C)  416; $12.50
D)  416; $13.00
E)  416; $13.50F) A) and B)
G) A) and E)

Question 11

Dress Boutique has 8,350 shares of stock outstanding at a price per share of $19.What will be the price per share if the firm pays a $.75 per share dividend and the applicable tax rate is 25 percent? Ignore market imperfections.

Accepted Answer

A)  $18.44
B)  $18.68
C)  $18.25
D)  $18.36
E)  $18.49F) B) and C)
G) A) and E)

Question 12

Jessica currently owns 500 shares of Alpha stock valued at $19 share.What will her investment in Alpha be worth if the company declares a 4-for-3 stock split?

Accepted Answer

A)  $6,075
B)  $9,500
C)  $11,000
D)  $7,125
E)  $8,800F) A) and E)
G) B) and E)

Question 13

The common stock of Beasley International goes ex-dividend tomorrow.The stock closed at a price of $28.06 a share today.This quarter, the company is paying a cash dividend of $.17 a share and a liquidating dividend of $.23 a share.Assuming the tax rate on dividends is 20 percent, what will be the ex-dividend price tomorrow morning?

Accepted Answer

A)  $27.74
B)  $27.68
C)  $27.94
D)  $33.96
E)  $27.66F) All of the above
G) B) and D)

Question 14

Cosmetics Emporium is preparing to pay its quarterly dividend of $1.76 a share.The stock closed at $79.65 a share today and goes ex-dividend tomorrow.What will the ex-dividend stock price be if the relevant tax rate is 21 percent and all else is held constant?

Accepted Answer

A)  $78.99
B)  $78.91
C)  $78.26
D)  $78.04
E)  $77.99F) A) and B)
G) C) and D)

Question 15

The argument that dividend policy is irrelevant tends to be supported by which one of these factors?

Accepted Answer

A)  Flotation costs associated with equity issues
B)  Current tax laws
C)  An unsatisfied demand for high-dividend-paying stocks
D)  Current equilibrium in the clientele dividend market
E)  The current tax exclusion available to corporate investorsF) C) and E)
G) D) and E)

Question 16

Which one of the following is least apt to limit the amount of cash dividends a firm can pay?

Accepted Answer

A)  Lack of retained earnings
B)  A bankruptcy proceeding
C)  A bond indenture covenant
D)  State laws
E)  Increasing stock priceF) A) and C)
G) A) and B)

Question 17

Davis Engineering declared a dividend to shareholders of record on Monday, February 8, that is payable on Friday, February 26.Carla knows that her dividend check normally arrives three business days after the check is written.On which one of the following days should she expect to receive her dividend check? Assume a 365-day year.

Accepted Answer

A)  Wednesday, February 10
B)  Thursday, February 11
C)  Monday, March 1
D)  Tuesday, March 2
E)  Wednesday, March 3F) B) and E)
G) C) and E)

Question 18

The Press has total assets of $848,000 and total debt of $402,000 on a market value basis.There are 25,000 shares of stock outstanding.The company has announced it is going to repurchase $40,000 worth of stock in the open market.What will be the price per share after the repurchase?

Accepted Answer

A)  $36.29
B)  $17.84
C)  $38.67
D)  $39.42
E)  $39.89F) B) and C)
G) C) and E)

Question 19

Most company managers overwhelming feel that:

Accepted Answer

A)  dividends should be increased annually no matter what.
B)  dividends should be flexible and adjusted annually in response to changes in the firm's earnings.
C)  the personal taxes of their shareholders must be their primary consideration when setting dividend policy.
D)  once a dividend is increased, it should not be decreased.
E)  dividend smoothing is talked about but rarely affects dividend decisions.F) B) and E)
G) A) and E)

Question 20

All of the following investors generally receive a tax break on dividend income with the exception of:

Accepted Answer

A)  corporate shareholders.
B)  pension funds.
C)  trust funds.
D)  endowment funds.
E)  individuals.F) A) and B)
G) C) and D)

Exam 14: Dividends and Dividend Policy

Which one of the following is least apt to limit the amount of cash dividends a firm can pay?

Correct Answer
verified

The clientele effect states that investors fall into various groups because of differences in their preferences for which one of the following?

Correct Answer
verified

Correct Answer
verified

AIW, Inc.currently has 275,000 shares of stock outstanding that sell for $87 per share.Assuming no market imperfections or tax effects exist, what will be the share price after AIW implements a 7-for-3 stock split?

Correct Answer
verified

Which statement is correct regarding US companies?

Correct Answer
verified

Correct Answer
verified

All of the following investors generally receive a tax break on dividend income with the exception of:

Correct Answer
verified

Correct Answer
verified

Jessica currently owns 500 shares of Alpha stock valued at $19 share.What will her investment in Alpha be worth if the company declares a 4-for-3 stock split?

Correct Answer
verified

Dragon Trucking just paid its annual regular cash dividend of $1.08 a share, along with a special dividend of $.12 a share.The company follows a policy of increasing its dividend by 1 percent annually.Which one of the following is the best estimate of the firm's next annual dividend payment?

Correct Answer
verified

Kelso's is considering spending $80,000 on either a stock repurchase or an extra cash dividend.Which one of the following values will be the same whether the firm pays a dividend or repurchases stock? Assume there are no taxes or market imperfections.

Correct Answer
verified

Correct Answer
verified

Fresh Baked Goods has 36,800 shares of stock outstanding at a market price of $24.91per share.What will be the price per share after a stock dividend of 6 percent? Ignore taxes and market imperfections.

Correct Answer
verified

Cosmetics Emporium is preparing to pay its quarterly dividend of $1.76 a share.The stock closed at $79.65 a share today and goes ex-dividend tomorrow.What will the ex-dividend stock price be if the relevant tax rate is 21 percent and all else is held constant?

Correct Answer
verified

Heidi owns 400 shares of Boyd Enterprises stock, which is valued at $13 a share.Boyd Enterprises just declared a stock dividend of 4 percent.How many shares will Heidi own and what will be the price per share after the dividend?

Correct Answer
verified

On which one of the following dates are dividend checks mailed?

Correct Answer
verified

Dress Boutique has 8,350 shares of stock outstanding at a price per share of $19.What will be the price per share if the firm pays a $.75 per share dividend and the applicable tax rate is 25 percent? Ignore market imperfections.

Correct Answer
verified

The Press has total assets of $848,000 and total debt of $402,000 on a market value basis.There are 25,000 shares of stock outstanding.The company has announced it is going to repurchase $40,000 worth of stock in the open market.What will be the price per share after the repurchase?

Correct Answer
verified

Most company managers overwhelming feel that:

Correct Answer
verified

The argument that dividend policy is irrelevant tends to be supported by which one of these factors?

Correct Answer
verified

Exam 14: Dividends and Dividend Policy

Which one of the following is least apt to limit the amount of cash dividends a firm can pay?

Correct AnswerverifiedShow Answer

The clientele effect states that investors fall into various groups because of differences in their preferences for which one of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

AIW, Inc.currently has 275,000 shares of stock outstanding that sell for $87 per share.Assuming no market imperfections or tax effects exist, what will be the share price after AIW implements a 7-for-3 stock split?

Correct AnswerverifiedShow Answer

Which statement is correct regarding US companies?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All of the following investors generally receive a tax break on dividend income with the exception of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Jessica currently owns 500 shares of Alpha stock valued at $19 share.What will her investment in Alpha be worth if the company declares a 4-for-3 stock split?

Correct AnswerverifiedShow Answer

Dragon Trucking just paid its annual regular cash dividend of $1.08 a share, along with a special dividend of $.12 a share.The company follows a policy of increasing its dividend by 1 percent annually.Which one of the following is the best estimate of the firm's next annual dividend payment?

Correct AnswerverifiedShow Answer

Kelso's is considering spending $80,000 on either a stock repurchase or an extra cash dividend.Which one of the following values will be the same whether the firm pays a dividend or repurchases stock? Assume there are no taxes or market imperfections.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Fresh Baked Goods has 36,800 shares of stock outstanding at a market price of $24.91per share.What will be the price per share after a stock dividend of 6 percent? Ignore taxes and market imperfections.

Correct AnswerverifiedShow Answer

Cosmetics Emporium is preparing to pay its quarterly dividend of $1.76 a share.The stock closed at $79.65 a share today and goes ex-dividend tomorrow.What will the ex-dividend stock price be if the relevant tax rate is 21 percent and all else is held constant?

Correct AnswerverifiedShow Answer

Heidi owns 400 shares of Boyd Enterprises stock, which is valued at $13 a share.Boyd Enterprises just declared a stock dividend of 4 percent.How many shares will Heidi own and what will be the price per share after the dividend?

Correct AnswerverifiedShow Answer

On which one of the following dates are dividend checks mailed?

Correct AnswerverifiedShow Answer

Dress Boutique has 8,350 shares of stock outstanding at a price per share of $19.What will be the price per share if the firm pays a $.75 per share dividend and the applicable tax rate is 25 percent? Ignore market imperfections.

Correct AnswerverifiedShow Answer

The Press has total assets of $848,000 and total debt of $402,000 on a market value basis.There are 25,000 shares of stock outstanding.The company has announced it is going to repurchase $40,000 worth of stock in the open market.What will be the price per share after the repurchase?

Correct AnswerverifiedShow Answer

Most company managers overwhelming feel that:

Correct AnswerverifiedShow Answer

The argument that dividend policy is irrelevant tends to be supported by which one of these factors?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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