Answer: B 28. The net effect of a stock repurchase is (a) similar to the payment of a stock dividend. (b) similar to a cash dividend. (c) similar to a stock split. (d) similar to a reverse stock split. Answer: B 29. Enhancement of shareholder value through stock repurchase is achieved by (a) reducing the number of shares outstanding and thereby raising earnings per share. (b) sending a positive signal to investors in the marketplace that management believes that the stock is undervalued. (c) providing a temporary floor for the stock price, which may have been declining. (d) all of the above. Answer: D 30. At the quarterly meeting of Tangshan Mining Corporation, held on September 10th, the directors declared a $1.00 per share dividend for the firm's 100,000 shares of common stock outstanding. The net effect of declaring and paying this dividend would be to (a) decrease total assets by $100,000 and increase stockholders equity by $100,000. (b) decrease total assets by S100.000 and decrease stockholders equity by $100,000. (c) increase total assets by $100,000 and increase stockholders equity by S100,000. (d) increase total assets by $100.000 and decrease stockholders equity by $100,000 Answer: B As a result of the Jobs and Growth Tax Relief Reconciliation Act of 2003, early studies showed that the percentage of firms paying quarterly dividends (a) increased. (b) decreased. (c) did not change. (d) none of the above. Answer: A 31. 32 Which type of dividend payment policy has the advantage that if the firm's earnings drop. dividends will still be maintained at a relatively constant level? (a) Constant-payout-ratio policy. (b) Regular dividend policy. (c) Low-regular-and-extra dividend policy. (d) none of the above. Answer: B 33. Tangshan Mining has 100,000 shares outstanding and just declared a 15 percent stock dividend. Before the announcement, the firm's shares were trading at $50.00 per share. After the stock divide the firm' should trade at per share. (a) $40,00 (b) $41.66 Answer: B 28. The net effect of a stock repurchase is (a) similar to the payment of a stock dividend. (b) similar to a cash dividend. (c) similar to a stock split. (d) similar to a reverse stock split. Answer: B 29. Enhancement of shareholder value through stock repurchase is achieved by (a) reducing the number of shares outstanding and thereby raising earnings per share. (b) sending a positive signal to investors in the marketplace that management believes that the stock is undervalued. (c) providing a temporary floor for the stock price, which may have been declining. (d) all of the above. Answer: D 30. At the quarterly meeting of Tangshan Mining Corporation, held on September 10th, the directors declared a $1.00 per share dividend for the firm's 100,000 shares of common stock outstanding. The net effect of declaring and paying this dividend would be to (a) decrease total assets by $100,000 and increase stockholders equity by $100,000. (b) decrease total assets by S100.000 and decrease stockholders equity by $100,000. (c) increase total assets by $100,000 and increase stockholders equity by S100,000. (d) increase total assets by $100.000 and decrease stockholders equity by $100,000 Answer: B As a result of the Jobs and Growth Tax Relief Reconciliation Act of 2003, early studies showed that the percentage of firms paying quarterly dividends (a) increased. (b) decreased. (c) did not change. (d) none of the above. Answer: A 31. 32 Which type of dividend payment policy has the advantage that if the firm's earnings drop. dividends will still be maintained at a relatively constant level? (a) Constant-payout-ratio policy. (b) Regular dividend policy. (c) Low-regular-and-extra dividend policy. (d) none of the above. Answer: B 33. Tangshan Mining has 100,000 shares outstanding and just declared a 15 percent stock dividend. Before the announcement, the firm's shares were trading at $50.00 per share. After the stock divide the firm' should trade at per share. (a) $40,00 (b) $41.66
