Question 1

All else equal,the market value of a stock will tend to decrease by roughly the amount of the dividend on the:

Accepted Answer

A)   dividend declaration date.
B)   ex-dividend date.
C)   date of record.
D)   date of payment.
E)   day after the date of payment.F) None of the above
G) A) and D)

Question 2

Schaeffer Shippers announced on May 1,2009,that it will pay a dividend of $5.00 per share on June 15 to all holders on record as of May 31st. The firm's stock price is currently at $70 per share. Assume that all investors are in the 33% tax bracket. Given that the ex-dividend date is May 29,what should happen to Schaeffer's stock price on May 29?

Accepted Answer

The stock price shou...

Question 3

Which of the following are valid reasons for a firm to reduce or eliminate its cash dividends?
I. The firm is on the verge of violating a bond restriction which requires a current ratio of 1.8 or higher.
II. A firm has just received a patent on a new product for which there is strong market demand and it needs the funds to bring the product to the marketplace.
III. The firm can raise new capital easily at a very low cost.
IV. The tax laws have recently changed such that dividends are taxed at an investor's marginal rate while capital gains are tax exempt.

Accepted Answer

A)   I and III only
B)   II and IV only
C)   II, III, and IV only
D)   I, II, and IV only
E)   I, II, III, and IVF) None of the above
G) A) and B)

Question 4

In an efficient market,ignoring taxes and time value,the price of stock should:

Accepted Answer

A)   decrease by the amount of the dividend immediately on the declaration date.
B)   decrease by the amount of the dividend immediately on the ex-dividend date.
C)   increase by the amount of the dividend immediately on the declaration date.
D)   increase by the amount of the dividend immediately on the ex-dividend date.
E)   Both decrease by the amount of the dividend immediately on the ex-dividend date; and increase by the amount of the dividend immediately on the declaration datE.F) A) and E)
G) B) and C)

Question 5

Samuel's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share. The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account,and $32,500 in the retained earnings account. The firm just announced a 50% (large)  stock dividend. What is the market value per share after the dividend?

Accepted Answer

A)   $6.00
B)   $8.00
C)   $9.00
D)   $10.50
E)   $12.00F) C) and D)
G) A) and E)

Question 6

Murphy's,Inc. has 10,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $8 per share. The balance sheet shows $32,500 in the capital in excess of par account,$10,000 in the common stock account and $42,700 in the retained earnings account. The firm just announced a 10% (small)  stock dividend. What will the market price per share be after the dividend?

Accepted Answer

A)   $7.20
B)   $7.27
C)   $7.33
D)   $8.00
E)   $8.80F) A) and B)
G) A) and C)

Question 7

The Tinslow Co. has 125,000 shares of stock outstanding at a market price of $93 a share. The company has just announced a 7-for-3 stock split. What will the market price per share be after the split?

Accepted Answer

A)   $38.27
B)   $39.86
C)   $40.40
D)   $46.18
E)   $55.80F) C) and E)
G) All of the above

Question 8

The date on which the board of directors passes a resolution authorizing payment of a dividend to the shareholders is the _____ date.

Accepted Answer

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

Question 9

Samuel's has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $12 per share. The balance sheet shows $7,000 in the common stock account,$58,000 in the capital in excess of par account and $32,500 in the retained earnings account. The firm just announced a 50% (large)  stock dividend. What is the value of the capital in excess of par account after the dividend?

Accepted Answer

A)   $58,000
B)   $61,500
C)   $87,000
D)   $96,500
E)   $100,000F) A) and E)
G) A) and D)

Question 10

Michael's Boating Supplies has 150,000 shares of stock outstanding with a par value of $1 per share and a market value of $10 a share. The company has retained earnings of $76,500 and capital in excess of par of $340,000. The company just announced a 1-for-5 reverse stock split. What will the market value per share be after the split?

Accepted Answer

A)   $1.00
B)   $5.00
C)   $10.00
D)   $25.00
E)   $50.00F) A) and D)
G) A) and C)

Question 11

From a tax-paying investor's point of view,a stock repurchase:

Accepted Answer

A)   is equivalent to a cash dividend.
B)   is more desirable than a cash dividend.
C)   has the same tax effects as a cash dividend.
D)   is more highly taxed than a cash dividend.
E)   creates a tax liability even if the investor does not sell any of the shares he owns.F) B) and E)
G) None of the above

Question 12

Priscilla owns 500 shares of Delta stock. It is January 1,2006,and the company recently issued a statement that it will pay a $1.00 per share dividend on December 31,2006 and a $.50 per share dividend on December 31,2007. Priscilla does not want any dividend this year but does want as much dividend income as possible next year. Her required return on this stock is 12%. Ignoring taxes,what will Priscilla's homemade dividend per share be in 2007?

Accepted Answer

A)   $0
B)   $.50
C)   $1.50
D)   $1.62
E)   $1.68F) B) and C)
G) A) and E)

Question 13

Murphy's,Inc. has 10,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $8 per share. The balance sheet shows $32,500 in the capital in excess of par account,$10,000 in the common stock account,and $42,700 in the retained earnings account. The firm just announced a 10% (small)  stock dividend. What will the balance in the retained earnings account be after the dividend?

Accepted Answer

A)   $34,700
B)   $35,700
C)   $42,700
D)   $49,700
E)   $50,700F) A) and C)
G) B) and D)

Question 14

Which of the following are factors that favor a high dividend policy?
I. Stockholders desire for current income
II. Tendency for higher stock prices for high dividend paying firms
III. Investor dislike of uncertainty
IV. High percentage of tax-exempt institutional stockholders

Accepted Answer

A)   I and III only
B)   II and IV only
C)   I, III, and IV only
D)   II, III, and IV only
E)   I, II, III, and IVF) B) and D)
G) C) and E)

Question 15

Robinson's has 15,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $36 a share. The balance sheet shows $15,000 in the common stock account,$315,000 in the capital in excess of par account,and $189,000 in the retained earnings account. The firm just announced a 3-for-2 stock split. How many shares of stock will be outstanding after the split?

Accepted Answer

A)   10,000 shares
B)   12,500 shares
C)   20,000 shares
D)   22,500 shares
E)   27,500 sharesF) B) and E)
G) B) and C)

Question 16

The information content of a dividend increase generally signals that:

Accepted Answer

A)   the firm has a one-time surplus of cash.
B)   the firm has few, if any, net present value projects to pursue.
C)   management believes that the future earnings of the firm will be strong.
D)   the firm has more cash than it needs due to sales declines.
E)   future dividends will be lower.F) A) and B)
G) C) and D)

Question 17

On June 9th,you purchased 3,000 shares of SP stock. On July 5th,you sold 400 shares of this stock for $21 a share. You sold an additional 400 shares on July 18th at a price of $22.50 a share. The company declared a $.30 per share dividend on June 20th to holders of record as of July 10th. This dividend is payable on July 31st. How much dividend income will you receive on July 31st as a result of your ownership of SP stock?

Accepted Answer

A)   $120
B)   $780
C)   $810
D)   $1,000
E)   It is impossible to calculate with the information givenF) C) and D)
G) B) and D)

Question 18

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

Accepted Answer

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

Question 19

You own 300 shares of Abco,Inc. stock. The company has stated that it plans on issuing a dividend of $.60 a share one year from today and then issuing a final liquidating dividend of $2.20 a share two years from today. Your required rate of return is 9%. Ignoring taxes,what is the value of one share of this stock today?

Accepted Answer

A)   $2.36
B)   $2.40
C)   $2.62
D)   $2.80
E)   $2.85F) None of the above
G) A) and E)

Question 20

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

Accepted Answer

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

Exam 19: Dividends and Other Payouts

Which of the following are factors that favor a high dividend policy? I. Stockholders desire for current income II. Tendency for higher stock prices for high dividend paying firms III. Investor dislike of uncertainty IV. High percentage of tax-exempt institutional stockholders

Correct Answer
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All else equal,the market value of a stock will tend to decrease by roughly the amount of the dividend on the:

Correct Answer
verified

The information content of a dividend increase generally signals that:

Correct Answer
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The date on which the board of directors passes a resolution authorizing payment of a dividend to the shareholders is the _____ date.

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The stock price shou...
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Correct Answer
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From a tax-paying investor's point of view,a stock repurchase:

Correct Answer
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In an efficient market,ignoring taxes and time value,the price of stock should:

Correct Answer
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Correct Answer
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The Tinslow Co. has 125,000 shares of stock outstanding at a market price of $93 a share. The company has just announced a 7-for-3 stock split. What will the market price per share be after the split?

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

Correct Answer
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Correct Answer
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Exam 19: Dividends and Other Payouts

Which of the following are factors that favor a high dividend policy? I. Stockholders desire for current income II. Tendency for higher stock prices for high dividend paying firms III. Investor dislike of uncertainty IV. High percentage of tax-exempt institutional stockholders

Correct AnswerverifiedShow Answer

All else equal,the market value of a stock will tend to decrease by roughly the amount of the dividend on the:

Correct AnswerverifiedShow Answer

The information content of a dividend increase generally signals that:

Correct AnswerverifiedShow Answer

The date on which the board of directors passes a resolution authorizing payment of a dividend to the shareholders is the _____ date.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe stock price shou...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

From a tax-paying investor's point of view,a stock repurchase:

Correct AnswerverifiedShow Answer

In an efficient market,ignoring taxes and time value,the price of stock should:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Tinslow Co. has 125,000 shares of stock outstanding at a market price of $93 a share. The company has just announced a 7-for-3 stock split. What will the market price per share be after the split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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The stock price shou...
View Answer

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