Question 1

As of 2003,the maximum tax rate on long-term capital gains for high-income individuals was which one of the following rates?

Accepted Answer

A)  10 percent
B)  15 percent
C)  20 percent
D)  35 percent
E)  39 percentF) B) and D)
G) A) and E)

Question 2

The balance sheet for Oasis,Inc.is shown here in market value terms.There are 30,000 shares of stock outstanding.  The company has announced it is going to repurchase $40,000 worth of stock.What will the price per share be after the repurchase?

Accepted Answer

A)  $36.29
B)  $38.17
C)  $38.67
D)  $39.42
E)  $39.89F) A) and E)
G) A) and D)

Question 3

Which one of the following is an example of a liquidating dividend?

Accepted Answer

A)  Valley Feed Mills recently sold its grain storage facility and is distributing the proceeds of that sale to its shareholders.
B)  Kate's Winery has excess cash that it wishes to distribute to its shareholders in addition to its normal cash dividend. This extra distribution usually occurs about once every year.
C)  Kurt's Music is planning to increase its quarterly dividend by 3 percent.
D)  The Dried Florist is preparing to pay its first annual dividend of $0.08 per share.
E)  Hi Tek had an extraordinarily profitable year and has decided to do a one-time only $10 per share cash dividend.F) None of the above
G) A) and E)

Question 4

Which one of the following events must occur before a firm can offer a liquidating dividend?

Accepted Answer

A)  Bankruptcy filing
B)  Insolvency declaration
C)  Asset sale
D)  Negative equity
E)  Failed bond issueF) C) and D)
G) A) and D)

Question 5

As compared to a cash dividend,a share repurchase will do which of the following?

Accepted Answer

A)  Increase both earnings per share and the PE ratio
B)  Increase the earnings per share but not affect the PE ratio
C)  Increase the earnings per share and decrease the PE ratio
D)  Not affect either the earnings per share nor the PE ratio
E)  Not affect the earnings per share but will decrease the PE ratioF) B) and D)
G) D) and E)

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

Question 7

Which one of the following factors favors a high-dividend payout?

Accepted Answer

A)  Low transaction costs on stock trades
B)  Lower taxes on capital gains than on dividends
C)  Tax deferment on capital gains, but not on dividend income
D)  Flotation costs
E)  Corporate shareholdersF) A) and C)
G) C) and D)

Question 8

Martin & Martin,Inc.stock is currently selling for $19 per share.The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $25 per share.What type of offer is being made?

Accepted Answer

A)  Rights offer
B)  Secondary issue
C)  Targeted repurchase
D)  Tender offer
E)  Private issueF) C) and D)
G) A) and E)

Question 9

Of the following,which two are the best reasons for doing a reverse stock split?
I.Return a stock to its normal trading range
II.Eliminate small shareholders
III.Reduce shareholder costs
IV.Avoid delisting

Accepted Answer

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

Question 10

Explain how the process of dividend smoothing affects the dividend growth rate as compared to the earnings growth rate.

Accepted Answer

Firms avoid increasing dividen...

Question 11

Downtown Merchants has paid a quarterly dividend of $0.60 per share for the past two years.This quarter,the firm plans to pay $0.60 plus an additional $0.05.The firm has stated that it uncertain whether it will pay $0.60 or $0.65 per share next quarter.Which one of the following is the best description of the additional $0.05 that is being paid this quarter?

Accepted Answer

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

Question 12

James Fabricators just liquidated its poorest performing division and realized net proceeds from the transaction of $2.2 million.The firm has 200,000 shares of stock outstanding at a market price of $62 a share.Which one of the following is the best estimate of the stock's post-dividend price per share if the firm distributes the entire liquidation proceeds in the form of a liquidating dividend? Ignore taxes and market imperfections.

Accepted Answer

A)  $51.00
B)  $51.38
C)  $53.40
D)  $58.79
E)  $62.00F) A) and D)
G) B) and E)

Question 13

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 B)
G) A) and C)

Question 14

What percentage of capital gains are excluded from taxation for corporate shareholders?

Accepted Answer

A)  0 percent
B)  10 percent
C)  25 percent
D)  70 percent
E)  75 percentF) A) and D)
G) B) and E)

Exam 14: Dividends and Dividend Policy

Which one of the following events must occur before a firm can offer a liquidating dividend?

Correct Answer
verified

Which one of the following factors favors a high-dividend payout?

Correct Answer
verified

The balance sheet for Oasis,Inc.is shown here in market value terms.There are 30,000 shares of stock outstanding. The company has announced it is going to repurchase $40,000 worth of stock.What will the price per share be after the repurchase?

Correct Answer
verified

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

Correct Answer
verified

As compared to a cash dividend,a share repurchase will do which of the following?

Correct Answer
verified

What percentage of capital gains are excluded from taxation for corporate shareholders?

Correct Answer
verified

Which one of the following is an example of a liquidating dividend?

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
verified

Martin & Martin,Inc.stock is currently selling for $19 per share.The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $25 per share.What type of offer is being made?

Correct Answer
verified

Of the following,which two are the best reasons for doing a reverse stock split? I.Return a stock to its normal trading range II.Eliminate small shareholders III.Reduce shareholder costs IV.Avoid delisting

Correct Answer
verified

As of 2003,the maximum tax rate on long-term capital gains for high-income individuals was which one of the following rates?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Explain how the process of dividend smoothing affects the dividend growth rate as compared to the earnings growth rate.

Correct Answer
verified
Firms avoid increasing dividen...
View Answer

Exam 14: Dividends and Dividend Policy

Which one of the following events must occur before a firm can offer a liquidating dividend?

Correct AnswerverifiedShow Answer

Which one of the following factors favors a high-dividend payout?

Correct AnswerverifiedShow Answer

The balance sheet for Oasis,Inc.is shown here in market value terms.There are 30,000 shares of stock outstanding. The company has announced it is going to repurchase $40,000 worth of stock.What will the price per share be after the repurchase?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As compared to a cash dividend,a share repurchase will do which of the following?

Correct AnswerverifiedShow Answer

What percentage of capital gains are excluded from taxation for corporate shareholders?

Correct AnswerverifiedShow Answer

Which one of the following is an example of a liquidating dividend?

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

Martin & Martin,Inc.stock is currently selling for $19 per share.The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $25 per share.What type of offer is being made?

Correct AnswerverifiedShow Answer

Of the following,which two are the best reasons for doing a reverse stock split? I.Return a stock to its normal trading range II.Eliminate small shareholders III.Reduce shareholder costs IV.Avoid delisting

Correct AnswerverifiedShow Answer

As of 2003,the maximum tax rate on long-term capital gains for high-income individuals was which one of the following rates?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain how the process of dividend smoothing affects the dividend growth rate as compared to the earnings growth rate.

Correct AnswerverifiedFirms avoid increasing dividen...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

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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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Firms avoid increasing dividen...
View Answer