Question 1

Red's Electronics has a balance sheet with equity account values of: common stock ($1 par)  of $70,500; capital surplus of $141,600; and retained earnings of $208,300.How many shares will be outstanding if the firm declares a 2-for-9 reverse stock split?

Accepted Answer

A)  5,833 shares
B)  15,667 shares
C)  18,000 shares
D)  305,750 shares
E)  317,250 sharesF) A) and B)
G) B) and C)

Question 2

Sarandon Construction just announced it will be paying an annual dividend of $1.48 per share plus an extra dividend of $.56 a share this year.The company also announced that its regular dividend, which is all it anticipates paying after this year, will increase by 2.5 percent annually.What is the anticipated dividend per share next year?

Accepted Answer

A)  $1.5119
B)  $1.5188
C)  $1.5170
D)  $1.9352
E)  $1.5009F) C) and E)
G) B) and C)

Question 3

Which one of the following reduces the number of shares outstanding but does not decrease the value of owners' equity?

Accepted Answer

A)  Stock repurchase
B)  Stock split
C)  Reverse stock split
D)  Cash distribution
E)  Liquidating dividendF) B) and D)
G) A) and D)

Question 4

Which one of the following increases the number of shares outstanding but does not change a firm's equity account values?

Accepted Answer

A)  Reverse stock split
B)  Cash distribution
C)  Stock split
D)  Liquidation dividend
E)  Special dividendF) C) and D)
G) C) and E)

Question 5

Davidson Interiors declared a dividend to holders of record on Thursday, October 15, that is payable on Monday, November 2.Suenette purchased 200 shares of Davidson Interiors stock on Monday, October 12, and Jake purchased 100 shares of this stock on the following day.Which one of the following statements is correct given this information?

Accepted Answer

A)  Both Suenette and Jake will receive this dividend.
B)  Suenette will receive the dividend but Jake will not.
C)  Jake will receive the dividend but Suenette will not.
D)  Neither Suenette nor Jake will receive this dividend.
E)  You cannot determine who will or will not receive this dividend based on the information provided.F) None of the above
G) B) and C)

Question 6

Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm's shareholders?

Accepted Answer

A)  Interest
B)  Capital surplus
C)  Retained earnings
D)  Dividend
E)  Stock repurchaseF) D) and E)
G) C) and E)

Question 7

Dunder Imports has common stock outstanding at a market price of $57 per share.The total market value of the firm is $5,130,000.The firm plans on liquidating one of its divisions for $500,000 in cash, after taxes, and distributing the proceeds to the shareholders in the form of a liquidating dividend.What will be the amount per share of that dividend?

Accepted Answer

A)  $5.794
B)  $5.556
C)  $5.220
D)  $5.308
E)  $5.382F) C) and E)
G) B) and E)

Question 8

Metal Fabricators recently sold its poorest performing division and realized net proceeds from the transaction of $1.63 million.The firm has 320,000 shares of stock outstanding and a market price of $49 a share.The firm is now preparing to distribute the entire sale proceeds in the form of a liquidating dividend.What is the best estimate of the ex-dividend stock price? Ignore taxes and market imperfections.

Accepted Answer

A)  $43.91
B)  $41.38
C)  $44.40
D)  $43.79
E)  $44.14F) C) and E)
G) None of the above

Question 9

Two weeks ago, Jensen's declared a dividend of $1.34 a share.The ex-dividend date is tomorrow.All else constant, which one of the following is the best estimate of Jensen's opening stock price tomorrow?

Accepted Answer

A)  $1.34 lower than today's closing price
B)  Today's closing price minus an amount approximately equal to the aftertax value of the dividend
C)  The same as today's closing price since the dividend is expected
D)  $1.34 higher than today's closing price
E)  Today's closing price plus an amount approximately equal to the aftertax value of the dividendF) A) and D)
G) A) and E)

Question 10

Which statement is correct?

Accepted Answer

A)  Cash dividends and stock repurchases are treated equally for tax purposes.
B)  In total dollars, cash dividends outweighed stock repurchases for the period 2003-2013.
C)  Many firms either ceased paying or decreased their dividends per share in response to the 2003 change in dividend taxation.
D)  Firms tend to prefer cash dividends over share repurchases for their flexibility and tax benefits.
E)  A non-dividend-paying firm is more apt to do a stock repurchase than to commence paying dividends.F) A) and C)
G) C) and D)

Question 11

Which one of the following statements is correct concerning the taxation of dividends and capital gains?

Accepted Answer

A)  Seventy percent of capital gains derived from stock investments are tax exempt for corporate investors.
B)  Dividends are a form of tax-exempt income for individual investors.
C)  All investors are subject to the same tax rate on dividend income.
D)  Individual investors can defer taxation on both dividends and capital gains.
E)  As of 2015, individual investors pay a tax rate that varies from 0 to 15 percent on dividend income.F) A) and B)
G) A) and C)

Question 12

Tattler, Inc.has declared a dividend of $2.10 a share.Suppose capital gains are not taxed, but dividends are taxed at 15 percent and that the IRS regulations require that taxes be withheld at the time the dividend is paid.Tattler sells for $67 per share, and the stock is about to go ex-dividend.What do you think the ex-dividend price will be?

Accepted Answer

A)  $62.40
B)  $65.22
C)  $65.08
D)  $66.67
E)  $68.04F) None of the above
G) A) and B)

Question 13

This morning, Structural Steel purchased 3,500 of its outstanding shares in the open market.What type of transaction was this?

Accepted Answer

A)  Stock payout
B)  Stock distribution
C)  Stock dividend
D)  Stock repurchase
E)  Stock reversalF) A) and B)
G) C) and D)

Question 14

Water Front Rentals has 20,000 shares of stock outstanding at a market price of $24 each and earnings per share of $1.84.The firm has decided to repurchase $75,000 worth of stock.What will the PE ratio be after the repurchase, all else held constant?

Accepted Answer

A)  11.55
B)  13.24
C)  9.50
D)  10.69
E)  11.01F) B) and D)
G) D) and E)

Question 15

Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?

Accepted Answer

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

Question 16

Harmerlin Enterprises has common stock outstanding at a market price of $72 per share.The total market value of the firm is $9,000,000.The firm plans on liquidating one of its divisions for $900,000 in cash, after taxes, and distributing the proceeds to the shareholders in the form of a liquidating dividend.What will be the amount per share of that dividend?

Accepted Answer

A)  $7.441
B)  $7.200
C)  $6.864
D)  $6.952
E)  $7.026F) B) and D)
G) A) and D)

Question 17

Botanical Gardens Nursery has 7,500 shares of stock outstanding at a market price of $18 a share.The earnings per share are $1.23.The firm has total assets of $384,000 and total liabilities of $146,000.Today, the firm is paying a quarterly cash dividend of $.22 a share.What will be the earnings per share after the dividend is paid if the tax rate on dividends is 15 percent?

Accepted Answer

A)  $1.01
B)  $1.04
C)  $1.23
D)  $1.17
E)  $1.20F) A) and B)
G) B) and D)

Question 18

B&K Lumber has 50,600 shares of stock outstanding at a price per share of $68.How many shares will be outstanding if the firm does a 5-for-2stock split?

Accepted Answer

A)  20,240 shares
B)  22,300 shares
C)  55,667 shares
D)  126,500 shares
E)  121,120 sharesF) A) and B)
G) A) and C)

Question 19

Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?

Accepted Answer

A)  Interest
B)  Distribution
C)  Retained earnings
D)  Dividend
E)  Stock repurchaseF) A) and E)
G) A) and D)

Question 20

Miller's Hardware recently paid $1.21 per share in dividends.The company currently has excess cash and would like to distribute an additional $.35 a share to its shareholders.However, the company is concerned about increasing the dividend by that amount as it will not be able to afford a similar increase in the future and doesn't want to lower the dividend once it has been raised.Which one of the following is probably the best suggestion for distributing the $.35 per share?

Accepted Answer

A)  Pay a special dividend of $.35 per share
B)  Pay an extra cash dividend of $.35 per share
C)  Pay a liquidating dividend of $.35 per share
D)  Increase the regular dividend by $.12 and pay a special dividend of $.23
E)  Increase the regular dividend by $.12 and pay an extra cash dividend of $23F) B) and D)
G) B) and E)

Exam 14: Dividends and Dividend Policy

This morning, Structural Steel purchased 3,500 of its outstanding shares in the open market.What type of transaction was this?

Correct Answer
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Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?

Correct Answer
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Red's Electronics has a balance sheet with equity account values of: common stock ($1 par) of $70,500; capital surplus of $141,600; and retained earnings of $208,300.How many shares will be outstanding if the firm declares a 2-for-9 reverse stock split?

Correct Answer
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Correct Answer
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Water Front Rentals has 20,000 shares of stock outstanding at a market price of $24 each and earnings per share of $1.84.The firm has decided to repurchase $75,000 worth of stock.What will the PE ratio be after the repurchase, all else held constant?

Correct Answer
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Which one of the following increases the number of shares outstanding but does not change a firm's equity account values?

Correct Answer
verified

Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm's shareholders?

Correct Answer
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Correct Answer
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B&K Lumber has 50,600 shares of stock outstanding at a price per share of $68.How many shares will be outstanding if the firm does a 5-for-2stock split?

Correct Answer
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Which one of the following reduces the number of shares outstanding but does not decrease the value of owners' equity?

Correct Answer
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Which statement is correct?

Correct Answer
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Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?

Correct Answer
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Correct Answer
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Correct Answer
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Two weeks ago, Jensen's declared a dividend of $1.34 a share.The ex-dividend date is tomorrow.All else constant, which one of the following is the best estimate of Jensen's opening stock price tomorrow?

Correct Answer
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Which one of the following statements is correct concerning the taxation of dividends and capital gains?

Correct Answer
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Correct Answer
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Exam 14: Dividends and Dividend Policy

This morning, Structural Steel purchased 3,500 of its outstanding shares in the open market.What type of transaction was this?

Correct AnswerverifiedShow Answer

Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?

Correct AnswerverifiedShow Answer

Red's Electronics has a balance sheet with equity account values of: common stock ($1 par) of $70,500; capital surplus of $141,600; and retained earnings of $208,300.How many shares will be outstanding if the firm declares a 2-for-9 reverse stock split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Water Front Rentals has 20,000 shares of stock outstanding at a market price of $24 each and earnings per share of $1.84.The firm has decided to repurchase $75,000 worth of stock.What will the PE ratio be after the repurchase, all else held constant?

Correct AnswerverifiedShow Answer

Which one of the following increases the number of shares outstanding but does not change a firm's equity account values?

Correct AnswerverifiedShow Answer

Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm's shareholders?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

B&K Lumber has 50,600 shares of stock outstanding at a price per share of $68.How many shares will be outstanding if the firm does a 5-for-2stock split?

Correct AnswerverifiedShow Answer

Which one of the following reduces the number of shares outstanding but does not decrease the value of owners' equity?

Correct AnswerverifiedShow Answer

Which statement is correct?

Correct AnswerverifiedShow Answer

Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Two weeks ago, Jensen's declared a dividend of $1.34 a share.The ex-dividend date is tomorrow.All else constant, which one of the following is the best estimate of Jensen's opening stock price tomorrow?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning the taxation of dividends and capital gains?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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