Lester is concerned about a stock in his portfolio because the dividend he just received exceeded the company's earnings per share for the same period.

What financial metric is Lester analyzing?

• a.)
• Dividend per share
• b.)
• Payout ratio
• c.)
• Dividend yield
• d.)
• Dividend cover

Why might a relatively new technology start-up prefer not to issue dividends?

• a.)
• In order to retain earnings and reinvest in growth
• b.)
• In order to preserve information asymmetry
• c.)
• In order to signal to investors that the company is on sound financial footing
• d.)
• In order to attract a specific clientele like retirees

What does the residual dividend model assume about the relationship between dividends and share value?

• a.)
• It assumes there is no appreciable relationship.
• b.)
• It assumes that share value rises when the target payout ratio is met.
• c.)
• It assumes that share value rises when dividends are consistent.
• d.)
• It assumes that share values fall if no dividends are distributed.

Diego owns 100 shares of stock in Company A that are valued at $40/share.

After Company A repurchases 10% of its outstanding shares on the open market, what does Diego own?

• a.)
• 100 shares valued at a lower price/share
• b.)
• 90 shares valued at a higher price/share
• c.)
• 90 shares valued at a lower price/share
• d.)
• 100 shares valued at a higher price/share