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Commerce and BusinessbackBusinessbackCorporate Finance/Financial ManagementbackFundamentals of Corporate FinancebackPractice Set 2492back

Dividends And Payout Policy

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Question 1
Free
Multiple Choice

Green Roof Motels has more cash on hand than its operations require.Thus,the firm has decided to pay out some of its earnings in the form of cash to its shareholders.What are these payments to shareholders called?

Choose correct answer/s
A

dividends

B

stock payments

C

repurchases

D

payments-in-kind

E

stock splits

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Question 2
Free
Multiple Choice

Lester's Frozen Foods just paid out $0.50 a share to its shareholders.The cash for these payments came from a large sale of assets,not from any earnings of the firm.What are these payments to shareholders called?

Choose correct answer/s
A

dividends

B

distributions

C

repurchases

D

payments-in-kind

E

stock splits

Check answer
Question 3
Free
Multiple Choice

A $0.60 quarterly cash payment paid by T.L.Jones & Co.to its shareholders in the normal course of business is called a:

Choose correct answer/s
A

repurchase.

B

liquidating dividend.

C

regular cash dividend.

D

special dividend.

E

extra cash dividend.

Check answer
Question 4
Free
Multiple Choice

The board of directors of Wilson Sporting Equipment met this afternoon and passed a resolution to pay a cash dividend of $0.42 a share next month.In relation to this dividend,today is referred to as which one of the following dates?

Choose correct answer/s
A

decision date

B

date-of-record

C

declaration date

D

payment date

E

ex-dividend date

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Question 5
Free
Multiple Choice

The ex-dividend date is defined as _____ business day(s)before the date of record.

Choose correct answer/s
A

1

B

2

C

3

D

5

E

10

Check answer
Question 6
Multiple Choice

Which one of the following dates is used to determine the names of shareholders who will receive a dividend payment?

Choose correct answer/s
A
ex-rights date
B
ex-dividend date
C
date of record
D
date of payment
E
declaration date
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Question 7
Multiple Choice

Dividend payments are mailed on which one of the following dates?

Choose correct answer/s
A
ex-rights date
B
ex-dividend date
C
date of record
D
date of payment
E
declaration date
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Question 8
Multiple Choice

Which one of the following refers to the ability of shareholders to undo a firm's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock?

Choose correct answer/s
A
perfect foresight model
B
personalization
C
recapitalization
D
offsetting leverage
E
homemade dividend policy
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Question 9
Multiple Choice

What is the information content effect?

Choose correct answer/s
A
any type of new information that causes a firm to cease paying dividends
B
any news announcement that was anticipated and thus produces no reaction from investors
C
the primary contributing data that helps directors determine the amount of a particular dividend payment
D
any type of reaction from a shareholder in response to a news announcement related to the stock issuer
E
the financial market's reaction to a change in the amount of a firm's dividend
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Question 10
Multiple Choice

The common stock of Pierson Enterprises has historically had a high dividend yield and is expected to continue to do so.As a result,the majority of its shareholders are individuals and entities that are seeking a regular source of cash income.Most of these shareholders pay either no taxes or a relatively low amount of taxes.The fact that most of these shareholders have similar characteristics is referred to by which one of the following terms?

Choose correct answer/s
A
information content effect
B
clientele effect
C
efficient markets hypothesis
D
distribution effect
E
market reaction effect
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Question 11
Multiple Choice

HJ Corporation has excess cash and has opted to buy some of its shares of outstanding common stock.What is this process of buying called?

Choose correct answer/s
A
stock dividend
B
stock split
C
stock repurchase
D
stock recap
E
stock repeal
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Question 12
Multiple Choice

Which one of the following involves a payment in shares by a stock issuer that increases the number of shares a shareholder owns but also decreases the value per share?

Choose correct answer/s
A
cash dividend
B
stock dividend
C
stock repurchase
D
stock split
E
reverse stock split
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Question 13
Multiple Choice

Which one of the following does not affect the total equity of a firm but does increase the number of shares outstanding?

Choose correct answer/s
A
special dividend
B
stock split
C
share repurchase
D
rights offer
E
liquidating dividend
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Question 14
Multiple Choice

Bell Weather Markets has recently sold for as little as $8 a share and as much as $15 a share.The difference between these two prices is referred to as the:

Choose correct answer/s
A
price variance.
B
bid-ask spread.
C
trading range.
D
opening price.
E
closing price.
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Question 15
Multiple Choice

A reverse stock split is defined as:

Choose correct answer/s
A
an increase in the number of shares outstanding that does not affect owners' equity.
B
a firm buying back existing shares of its stock on the open market.
C
a firm selling new shares of stock on the open market.
D
a decrease in the number of shares outstanding that does not affect owners' equity.
E
a decrease in both the number of shares outstanding and the price per share.
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Question 16
Multiple Choice

Which one of the following statements related to cash dividends is correct?

Choose correct answer/s
A
Extra cash dividends cannot be repeated in the future.
B
A dividend is never a liability until it has been declared.
C
If a firm has paid regular quarterly dividends for at least five consecutive years it is legally obligated to continue doing so.
D
Regular cash dividends reduce paid-in capital.
E
The dividend yield expresses the annual dividend as a percentage of net income.
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Question 17
Multiple Choice

Billingsley United declared a $0.20 a share dividend on Thursday,October 16.The dividend will be paid on Monday,November 10 to shareholders of record on Friday,October 31.Which one of the following is the ex-dividend date?

Choose correct answer/s
A
Tuesday, October 28
B
Wednesday, October 29
C
Thursday, October 30
D
Wednesday, November 5
E
Thursday, November 6
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Question 18
Multiple Choice

Taylor's Tools declared a $0.48 per share dividend on Friday,March 7.The dividend will be paid on Monday,April 7.The ex-dividend date is Tuesday,March 18.What is the record date?

Choose correct answer/s
A
Friday, March 14
B
Monday, March 17
C
Wednesday, March 19
D
Thursday, March 20
E
Friday, March 21
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Question 19
Multiple Choice

The last date on which you can purchase shares of stock and still receive the dividend is the date which is _____ business days prior to the date of record.

Choose correct answer/s
A
1
B
2
C
3
D
4
E
5
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Question 20
Multiple Choice

Kate purchased 500 shares of Fast Deliveries stock on Wednesday,July 7th.Ted purchased 100 shares of Fast Deliveries stock on Thursday,July 8th.Fast Deliveries declared a dividend on June 20th to shareholders of record on July 12th and payable on August 1st.Which one of the following statements concerning the dividend paid on August 1st is correct given this information?

Choose correct answer/s
A
Neither Kate nor Ted is entitled to the dividend.
B
Kate is entitled to the dividend but Ted is not.
C
Ted is entitled to the dividend but Kate is not.
D
Both Ted and Kate are entitled to the dividend.
E
Both Ted and Kate are entitled to one-half of the dividend amount.
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