Question 20

1. 8 - 1: A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debt/equity ratio, is called a _______________.

   A.

   homemade dividend

   B.

   clientele effect

   C.

   residual dividend approach

   D.

   bird-in-the-hand approach

   E.

   constant dividend growth model

Question 21

1. 8-2: If the firm's dividend payout tends to vary according to its realized income, the firm most likely follows a ___________ dividend policy.

   	A.	open
   	B.	constant
   	C.	cyclical
   	D.	residual
   	E.	special

Question 22

1. 8 - 3: Which of the following would NOT likely be a possible information effect attributed to changes in a firm's dividend policy?

   	A.	The firm's liquidity position.
   	B.	The firm's growth prospects.
   	C.	The firm's profitability.
   	D.	The firm's financial leverage.
   	E.	The firms good will.

Question 23

1. 8 - 4: An alternative to a cash dividend payment by the firm from its earnings to the shareholders, achieved by the firm buying some of its outstanding stock on the open market, is a:

   	A.	Merger.
   	B.	Tender offer.
   	C.	Payment-in-kind.
   	D.	Stock split.
   	E.	Share repurchase.

Question 24

1. 9-1: The balance of cash shown by a firm on its books at any one time is the firm's _________.

   	A.	tax balance
   	B.	market value of cash
   	C.	speculative cash
   	D.	ledger balance
   	E.	available balance

Question 25

1. 9 - 2: The need to hold cash to take advantage of additional investment opportunities is called the:

   	A.	Speculative motive.
   	B.	Precautionary motive.
   	C.	Transaction motive.
   	D.	Float motive.
   	E.	Compensating balance motive.

Question 26

1. 9 - 3: _______ is a system for managing demand-dependent inventories that minimizes the inventory holdings of the firm at any given time.

   A.

   Just-in-time inventory

   B.

   Turnover inventory

   C.

   Net working capital planning

   D.

   Inventory scoring

   E.

   Inventory ranking

Question 27

1. 9 - 4: The credit instrument is the _________________________.

   A.

   legal document submitted to the IRS for every business transaction in the United States.

   B.

   basic evidence of indebtedness in a credit transaction.

   C.

   cost of obtaining financing on consumer products.

   D.

   means of payment chosen by the purchaser in a standard EOM transaction.

   E.

   receipt for payment issued by the firm on its cash disbursements.