1

Cash dividends are paid directly to bondholders.

True

False

Question 2

In a stock repurchase,the company uses its cash to buy back its own shares from the marketplace,thereby increasing the number of shares outstanding.

True

False

Question 3

A firm's dividend policy determines how much cash it will distribute to its shareholders.

True

False

Question 4

The date on which the dividend is formally declared by the board of directors is known as the declaration date.

True

False

Question 5

If an investor acquires shares in acompany after the ex-dividend date, she/he will still receive the dividends for that quarter.

True

False

Question 6

The tender offer is generally made below the current market price.

True

False

Question 7

A pro-ratadistribution of additional shares of the stock to current stockholders is known as a stock dividend.

True

False

Question 8

Stock splits are often done to make the shares of the company more marketable.

True

False

Question 9

When a company purchases shares directly from one of its major shareholders,it is usually done on a negotiated basis.

True

False

Question 10

A stock split is a taxable event.

True

False

Question 11

If a firm's dividends per share are $1.50and the company's earnings per share are $5.00,the dividend payout ratio is:

A.15%

B.30%

C.50%

D.75%

Question 12

The most common method for companies to repurchase theirshares is:

A.tender offer

B.initial public offering

C.open market purchase

D.negotiated purchase from a major shareholder

Question 13

Which of the following are true regarding stock splits?

A.they do not affect proportionate ownership of investors

B.they do not affect assets or liabilities

C.they do not affect total equity

D.all of the above

Question 14

If you own 5,000shares of a company,how many shares would you own after a 5-for-1split?

A.1,000

B.2,500

C.10,000

D.25,000

Question 15

You own 2,000shares of a company and its market price is $30.If the company declares a 3-for 1split,what would be the new share price of the stock?

A.$10

B.$15

C.$60

D.$90

Question 16

When a company repurchases its shares,the company's number of shares outstanding:

A.decreases

B.increases

C.stays the same

D.fluctuates

Question 17

Firms generally maintain a

A.volatile payout

B.random payout

C.stable payout

D.indeterminable payout

Question 18

When a company uses its own earnings after financing investment opportunities,this is known as:

A.redirected dividend policy

B.residual dividend policy

C.reinstated dividend policy

D.recourse dividend policy

Question 19

The plan under which you are allowed to reinvest the dividend in the company's stock automatically without paying any brokerage fees is known as:

A.individual retirement account (IRA)

B.dividend reinvestment plan (DRIP)

C.initial public offering (IPO)

D.dividend withdrawal plan (DWP)

Question 20

The two fundamental attributes of the dividend policy are dividend payout ratio and:

A.earnings per share

B.dividend stability

C.net revenue growth

D.high P/E ratio