Question 1

Verbal Communications,Inc.,has 14,000 shares of stock outstanding with a par value of $1 per share and a market value of $32 per share.The firm just announced a 100 percent stock dividend.What is the market value per share after the dividend?

Accepted Answer

A)  $16.00
B)  $23.00
C)  $32.00
D)  $46.00
E)  $64.00F) C) and D)
G) C) and E)

Question 2

If you ignore taxes and costs,a stock repurchase will:
I.reduce the total assets of a firm.
II.decrease the earnings per share.
III.reduce the PE ratio more so than an equivalent stock dividend.
IV.reduce the total equity of a firm.

Accepted Answer

A)  I and III only
B)  I and IV only
C)  II and IV only
D)  I, III, and IV only
E)  II, III, and IV onlyF) A) and E)
G) All of the above

Question 3

A small stock dividend is defined as a stock dividend of less than _____ percent.

Accepted Answer

A)  10 to 15
B)  15 to 20
C)  20 to 25
D)  25 to 30
E)  30 to 35F) A) and D)
G) A) and C)

Question 4

A stock split:

Accepted Answer

A)  increases the total value of the common stock account.
B)  decreases the value of the retained earnings account.
C)  increases the par value per share.
D)  increases the value of the capital in excess of par account.
E)  decreases the market value per share.F) A) and B)
G) All of the above

Question 5

Which one of the following is a direct result of a 2-for-1 stock split?

Accepted Answer

A)  a 100 percent increase in the number of shareholders
B)  a 100 percent increase in the common stock account balance
C)  a 100 percent decrease in the stock price
D)  a 50 percent increase in the number of shares outstanding
E)  a 50 percent decrease in the par value per shareF) B) and E)
G) B) and D) E

Question 6

Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

Accepted Answer

A)  $16.80
B)  $21.60
C)  $28.00
D)  $46.67
E)  $56.00F) A) and B)
G) B) and D)

Question 7

Which one of the following dates is used to determine the names of shareholders who will receive a dividend payment?

Accepted Answer

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

Question 8

The common stock of Checkers,Inc.is selling for $56 a share and the par value per share is $1.Currently,the firm has a total market value of $812,000.How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?

Accepted Answer

A)  9,667 shares
B)  12,500 shares
C)  14,500 shares
D)  17,750 shares
E)  21,750 sharesF) B) and C)
G) B) and E) E

Question 9

Which one of the following statements correctly applies to U.S.industrial firms based on the period of 1984-2004?

Accepted Answer

A)  Earnings growth rates tend to lag dividend growth rates.
B)  Dividends tend to fluctuate significantly from quarter to quarter.
C)  The percentage of these firms paying dividends in 2004 was higher than in 1984.
D)  The total amount of dividends paid by these firms was greater in 2004 than in 1984.
E)  Non-dividend paying firms in 1984 were more apt to commence paying regular dividends than to implement a stock repurchase program.F) None of the above
G) C) and D)

Question 10

Stock repurchase programs appear to becoming more popular with business firms.Explain the appeal of these programs as compared to that of cash dividend programs from the stock issuer's point of view.

Accepted Answer

Both stock repurchase and cash dividend ...

Question 11

Revol-Tech is a technology firm with excellent growth prospects.The firm wishes to do something to acknowledge the loyalty of the shareholders but needs all of its available cash to fund the firm's rapid growth.The market price of the stock is currently trading at the upper end of its preferred trading range.The firm is most apt to consider which one of the following in this situation?

Accepted Answer

A)  liquidating dividend
B)  stock split
C)  reverse stock split
D)  small stock dividend
E)  special cash dividendF) None of the above
G) All of the above

Question 12

Purvis Lawn Products has 18,000 shares of stock outstanding at a market price of $5.50 a share.What will the market price per share be if the company does a 1-for-4 reverse stock split?

Accepted Answer

A)  $1.38
B)  $5.50
C)  $11.00
D)  $16.50
E)  $22.00F) A) and B)
G) C) and E)

Question 13

Val's Marina Supply has 3,500 shares of stock outstanding with a par value of $1.00 per share and a market value of $19 per share.The balance sheet shows $3,500 in the common stock account,$24,000 in the capital in excess of par account,and $31,400 in the retained earnings account.The firm just announced a 100 percent stock dividend.What is the value of the capital in excess of par account after the dividend?

Accepted Answer

A)  $0
B)  $20,500
C)  $24,000
D)  $55,500
E)  $87,000F) A) and E)
G) B) and C)

Question 14

Which one of the following statements is correct?

Accepted Answer

A)  Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need.
B)  Share repurchases tend to increase agency costs.
C)  Maintaining a steady dividend is a key goal of most dividend-paying firms.
D)  Tax rates are the key factor in determining a firm's dividend policy.
E)  Stock prices tend to ignore expected changes in dividend payments.F) C) and D)
G) B) and C)

Question 15

Which one of the following statements related to stock repurchases is correct?

Accepted Answer

A)  An open market stock repurchase increases the total wealth of a shareholder if you ignore taxes, costs, and market imperfections.
B)  Targeted repurchases must be offered to all shareholders but can be done in steps such that only a portion of the shareholders have the option to sell at any one point in time.
C)  When a firm wishes to repurchase shares in the open market, it will do so in a special trading session that is set up by the SEC.
D)  A firm may spend more cash over the course of a year on stock repurchases than it does on cash dividends.
E)  Tender offer prices must be set equal to the opening market price on the day the tender offer is announced.F) D) and E)
G) A) and B)

Question 16

Sligo Minerals stock is currently trading at $6 a share.The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares.The firm should consider a:

Accepted Answer

A)  reverse stock split.
B)  liquidating dividend.
C)  stock dividend.
D)  stock split.
E)  special dividend.F) A) and B)
G) A) and C)

Question 17

You own 1,500 shares of stock in Avondale Corporation.You will receive a $0.80 per share dividend in one year.In two years,Avondale will pay a liquidating dividend of $35 per share.The required return on Avondale stock is 16 percent.You only want $200 total in dividends in year one and accomplish this by using homemade dividends.What will your total dividend amount be in year two?

Accepted Answer

A)  $35,696
B)  $40,764
C)  $53,660
D)  $61,402
E)  $63,878F) B) and D)
G) C) and E)

Question 18

Which one of the following favors a low dividend policy?

Accepted Answer

A)  the tax on capital gains is deferred until the gain is realized
B)  few, if any, positive net present value projects are available to a firm
C)  a majority of the shareholders has a low relevant tax rate
D)  a majority of the shareholders has better investment opportunities with similar risks
E)  corporate tax rates exceed personal tax ratesF) A) and D)
G) All of the above

Question 19

Explain how cash dividends affect individual shareholders differently than an equal amount of funds spent on a repurchase.

Accepted Answer

Dividends are payable to all shareholder...

Question 20

Cooper Brands,Inc.,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Accepted Answer

A)  $50.40
B)  $58.20
C)  $62.50
D)  $78.75
E)  $82.50F) D) and E)
G) A) and B) A

Exam 17: Dividends and Payout Policy

Verbal Communications,Inc.,has 14,000 shares of stock outstanding with a par value of $1 per share and a market value of $32 per share.The firm just announced a 100 percent stock dividend.What is the market value per share after the dividend?

Correct Answer
verified

If you ignore taxes and costs,a stock repurchase will: I.reduce the total assets of a firm. II.decrease the earnings per share. III.reduce the PE ratio more so than an equivalent stock dividend. IV.reduce the total equity of a firm.

Correct Answer
verified

A small stock dividend is defined as a stock dividend of less than _____ percent.

Correct Answer
verified

A stock split:

Correct Answer
verified

Which one of the following is a direct result of a 2-for-1 stock split?

Correct Answer
verified
E

Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

Correct Answer
verified

Which one of the following dates is used to determine the names of shareholders who will receive a dividend payment?

Correct Answer
verified

The common stock of Checkers,Inc.is selling for $56 a share and the par value per share is $1.Currently,the firm has a total market value of $812,000.How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?

Correct Answer
verified
E

Which one of the following statements correctly applies to U.S.industrial firms based on the period of 1984-2004?

Correct Answer
verified

Stock repurchase programs appear to becoming more popular with business firms.Explain the appeal of these programs as compared to that of cash dividend programs from the stock issuer's point of view.

Correct Answer
verified
Both stock repurchase and cash dividend ...
View Answer

Correct Answer
verified

Purvis Lawn Products has 18,000 shares of stock outstanding at a market price of $5.50 a share.What will the market price per share be if the company does a 1-for-4 reverse stock split?

Correct Answer
verified

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
verified

Which one of the following statements related to stock repurchases is correct?

Correct Answer
verified

Sligo Minerals stock is currently trading at $6 a share.The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares.The firm should consider a:

Correct Answer
verified

Correct Answer
verified

Which one of the following favors a low dividend policy?

Correct Answer
verified

Explain how cash dividends affect individual shareholders differently than an equal amount of funds spent on a repurchase.

Correct Answer
verified
Dividends are payable to all shareholder...
View Answer

Cooper Brands,Inc.,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Correct Answer
verified
A

Exam 17: Dividends and Payout Policy

Verbal Communications,Inc.,has 14,000 shares of stock outstanding with a par value of $1 per share and a market value of $32 per share.The firm just announced a 100 percent stock dividend.What is the market value per share after the dividend?

Correct AnswerverifiedShow Answer

If you ignore taxes and costs,a stock repurchase will: I.reduce the total assets of a firm. II.decrease the earnings per share. III.reduce the PE ratio more so than an equivalent stock dividend. IV.reduce the total equity of a firm.

Correct AnswerverifiedShow Answer

A small stock dividend is defined as a stock dividend of less than _____ percent.

Correct AnswerverifiedShow Answer

A stock split:

Correct AnswerverifiedShow Answer

Which one of the following is a direct result of a 2-for-1 stock split?

Correct AnswerverifiedE

Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

Correct AnswerverifiedShow Answer

Which one of the following dates is used to determine the names of shareholders who will receive a dividend payment?

Correct AnswerverifiedShow Answer

The common stock of Checkers,Inc.is selling for $56 a share and the par value per share is $1.Currently,the firm has a total market value of $812,000.How many shares of stock will be outstanding if the firm does a 3-for-2 stock split?

Correct AnswerverifiedE

Which one of the following statements correctly applies to U.S.industrial firms based on the period of 1984-2004?

Correct AnswerverifiedShow Answer

Stock repurchase programs appear to becoming more popular with business firms.Explain the appeal of these programs as compared to that of cash dividend programs from the stock issuer's point of view.

Correct AnswerverifiedBoth stock repurchase and cash dividend ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Purvis Lawn Products has 18,000 shares of stock outstanding at a market price of $5.50 a share.What will the market price per share be if the company does a 1-for-4 reverse stock split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

Which one of the following statements related to stock repurchases is correct?

Correct AnswerverifiedShow Answer

Sligo Minerals stock is currently trading at $6 a share.The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares.The firm should consider a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following favors a low dividend policy?

Correct AnswerverifiedShow Answer

Explain how cash dividends affect individual shareholders differently than an equal amount of funds spent on a repurchase.

Correct AnswerverifiedDividends are payable to all shareholder...View AnswerShow Answer

Cooper Brands,Inc.,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Correct AnswerverifiedA

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E

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E

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Correct Answer
verified
Both stock repurchase and cash dividend ...
View Answer

Correct Answer
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Correct Answer
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Dividends are payable to all shareholder...
View Answer

Correct Answer
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A