7. Aunt Ruth's Cookies is planning a 1-3 stock split. If Susan has 35 shares and they are worth $120 each, how many and at what worth would Susan have after the split? a. 11.67 shares $360 each b. 35 shares $240 each c 50 shares $105 each d. 70 shares $60 each e. 105 shares $40 each 8. The main objective of a firm's dividend policy is a. Always pay the same dividend each period. b. Always pay a high dividend, even when net income is temporarily reduced. c. Always pay a dividend in whole dollars. d. Always pay a stock dividend when there is no cash available for dividends. e. Avold rejecting positive NPV projects to pay a dividend. are often viewed by market participants as favorable signals of future firm prospects. a. Financial distress b. Repurchase announcements c. Subjective approaches d. Dividend cuts e. Reorganization plans 10. Financial distress costs a. can be direct or indirect b. are a possible result of too much debt C. could result in bankruptcy of the firm d. all of the above e. none of the above 11. Financial restructuring of a failing firm to attempt to continue operations is known as: a. Extension b. Reorganization c. Static Theory of Capital Structure d. Pure Play Approach e. Bankruptcy 12. Standard Bank has a debt/equity ratio of .43. What are the weight percentages of debt and equity? a. Equity 66%; Debt 34% b. Equity 40%; Debt 60% C. Equity 70%; Debt 30% d. Equity 33%; Debt 67% e. Equity 50%; Debt 50% 13. Which of the following would NOT be needed for the Capital Asset Pricing Model? a. the risk free rate b. the beta for this asset c. the rate expected in the marketplace d. the average beta for the marketplace e. the risk premium 14. The process of combining investments to reduce risk is called: a. The Principal of Diversification b. M&M Proposition I c. M&M Proposition II d. The Static Theory of Capital Structure e. The Capital Asset Pricing Model