Question
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
Cash dividends are paid directly to bondholders.
True
False
Question 2In 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 3A firm's dividend policy determines how much cash it will distribute to its shareholders.
True
False
Question 4The date on which the dividend is formally declared by the board of directors is known as the declaration date.
True
False
Question 5If an investor acquires shares in acompany after the ex-dividend date, she/he will still receive the dividends for that quarter.
True
False
Question 6The tender offer is generally made below the current market price.
True
False
Question 7A pro-ratadistribution of additional shares of the stock to current stockholders is known as a stock dividend.
True
False
Question 8Stock splits are often done to make the shares of the company more marketable.
True
False
Question 9When a company purchases shares directly from one of its major shareholders,it is usually done on a negotiated basis.
True
False
Question 10A stock split is a taxable event.
True
False
Question 11If 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 12The 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 13Which 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 14If 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 15You 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 16When a company repurchases its shares,the company's number of shares outstanding:
A.decreases
B.increases
C.stays the same
D.fluctuates
Question 17Firms generally maintain a
A.volatile payout
B.random payout
C.stable payout
D.indeterminable payout
Question 18When 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 19The 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 20The 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
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