Multiple Choice (Total Point: 2.00) #1 The date before which a new investor is entitled to receive a declared dividend, but on or after which he or she does not receive the dividend, is called the ............... date. Answer 0 Ex- rights O Ex-dividend 0 Record 0 Declaration Multiple Choice (Total Point: 2.00) #10 Which of the following best describes the signaling effect of dividend policy] announcements? Answer 0 It indicates high future dividend O A dividend can highlight information about the business to the investors It has no indication of the company's financial results 0 It indicates poor cash flow health Multiple Choice (Total Point: 2.00) #2 The purpose of a stock split is to Answer 0 decrease the dividend payment 0 increase the market price of stock enhance the trading activity of the 0 stock by lowering its market price 0 change the firm's capital structure Multiple Choice (Total Point: 2.00) #3 Dividends paid out of capital, it is known as Answer Capital dividend Liquidating dividend Partial dividend Paid -up dividendMultiple Choice (Total Point: 2.00) #4 As a result of a firm announcing a large unexpected increase in its dividend payment, the price of the firm's ordinary shares rises. Which of the following explains this effect? Answer 0 The dividend irrelevance theory 0 The tax preference theory 0 The informational effect 0 The clientele effect #5 Which of the followings is TRUE? Answer 0 The ex-dividend date occurs prior to the declaration date The payment of cash dividends to ordinary shareholders is decided by the firm's chief financial officer. The clientele effect suggests that a firm will strategize a dividend payout policy which can attract certain type of investors who prefer the particular dividend policy. The bird-in-the-hand theory indicates that investors prefer to have future capital gains rather than current dividend income because the value is normally higher. #6 The following statements relate to dividend policy: 1 According to Modigliani and Miller, in a perfect capital market, shareholders are indifferent between dividends and capital gains. 2 Residual theory states that dividends should be paid ahead of investing in positive NPV projects. Are both statements true or false? Answer 0 Both statements are true 0 Both statements are false Statement 1 is true and statement 2 is false Statement 2 is true and statement 1 is false Multiple Choice (Total Point: 2.00) #7 A scrip dividend is Answer A dividend paid at a fixed percentage at specific dates during the year A dividend paid at a fixed percentage 0 on the market value of the shares on the date the dividend is declared A dividend payment that takes the form of new shares instead of cash 0 A cash dividend that is not fixed but 0 is decided on by the directors and approved by the shareholders #8 Which of the following is true about stock dividend? Answer 0 It decreases the par value of the stock and increases the number of shares It increases retained earnings by the total market value of stock dividends 0 It reduces the pro rate number of shares to each stockholder 0 None of the above Multiple Choice (Total Point: 2.00) #9 Gordon's 'bird-in-the-hand' argument suggests that cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc Answer 0 Dividends are irrelevant Shareholders are generally risk averse O and attach less risk to current dividends The market value of the firm is O unaffected by the firm's dividend policy Firms should have a low dividend O payout policy