8. Lower taxes on capital gains than on dividends C. Tax deferment on capital gains, but not on divided income D. 100 percent stock dividend E. 200 percent stock dividend 23. Of the following which two are the best for doing a revere stock spot? Return a stock to its normal tradine ranet H. Eliminate small shareholders mi. Reduce shareholder coats N. Avold dellsting D. Rotation costs E. Corporate shareholders 16. All of the following investors generally receive a tax break en dividend income with the exception of: A. corporate shareholders. B. pension funds. C trust funds. D. endowment funds. E. individuals. 17. M&N stock is currently selling for $22 per share. The firme 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? A. Rights offer 3. Secondary issue Targeted repurchase D. Tender offer E. Private issue 18. All of the following are means of reducing the number of outstanding shares with the exception of a(n: A. open market purchase. B. reverse stock split. C tender offer. D. rights offer. E. targeted repurchase A. I and I B. I and III Cll and I D. I and IV E. I and IV 24. The common stuck of White's Hardwedonda $42.15 a share today. Tomorrow morning the stock goes ex-dividend. The dividend that is being paid this quarters $1.26 a share. Assume the tax rate on dividends is 15 percent, te equal, what should the opening stock pricebe tomorrow morning? A. $42.15 8. $40.94 $40.99 0. $11.08 E. $41.23 25. The common stock of Heasley International goes e dividend tomorrow. The stock dosed at a price of $28.06 a share today. This quarter, the company is paying a cash dividend of $.17 a share and a liquidating dividend of $.23 share. Assuming the tax rate on dividends is 20 percent, what will be the ex-dividend price tomorrow morning? A. $27.74 B. $27.68 C $27.94 $38.96 D. E. $27.66 26. Dragon Trucking just paid its annual regular cash diddend of $1.09 a share, along with a special dividend of $.12 a share. The company follows a policy of increasing its dividend by 1 percent annually. Which one of the following is the best estimate of the firm's next annual dividend payment? A. $1.1925 a. $1.0908 C $1.2120 D. 51.0912 E. $1.5032 27. Fried Foods recently liquidated its fast-food division. That unit represented 30 percent of the firm's overall market value. Prior to the quidation, the firm's stock was selling for $46 a share, the annual dividend was steady at $1.20 per share, and there were 18,000 shares outstanding. The firm is preparing to distribute the entire liquidation proceeds to shareholders. How much should shareholders expect to receive per share from the liquidon dividend? lenore taves. A $14.24 B. $13.30 C. $14.10 0. $13.30 L $13.80 $ 29. Dwe's has a market value halance sheet as shown below. The form currently has 7,200 shares of stock outstanding and net income of $10.SDO, 19. A stock repurchase will A. Increase the number of shares outstanding B. decrease the earnings per share. C. decrease the market price per share D. Increase the market value per share E. decrease the PE ratio. 20. Assume there are ne taxes or imperfections. Given this assumption, which one of the following statements is correct? A. A cash dividend has no effect on the market price of the payer's stock. B. A cash dividend decreases shareholder wealth. C. Stock repurchases decrease the market value per share. D. Both a cash dividend and a share repurchase increase a firm's PE ratla. E. A stock repurchase has the same effect on a firm's market value balance sheet as does a cash dividend, Excusach Other Les Total Market Value Balance Sheet 314,300 Debt $84.000 1460 Equity 145.00 $ $22960 Total 520,166 The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend. What will the firm's PE ratio beater this dividend is pald, all else held constant7 Ignore taxes 21. Which statement is correct? A. Cash dividends and stock repurchases are treated equally for tax purposes. 8. In total dollars, cash dividends outweighed stock repurchases for the period 2009-2011. C. Many firms elther ceased paying or decreased their dividends per share in response to the 2003 change in dividend taxation. D. Firms tend to prefer cash dividends over share repurchases for their flexibility and tax benefits. E. A non-dividend-paying firm is more apt to do a stack repurchase than to commence paying dividends. A. 14.20 B. 16.67 C 13.08 D. 11.22 E. 14.57 22. Which one of the following is basically equivalent to a Z-for-1 stock split? A. 20 percent stock dividend B. 25 percent stock dividend C. 50 percent stock dividend