Question 1

Blasco's has a market value equal to its book value.Currently,the firm has excess cash of $1,332,other assets of $11,674,and equity of $7,200.The firm has 1,200 shares of stock outstanding and net income of $838.Blasco's has decided to spend one-third of its excess cash on a share repurchase program.How many shares of stock will be outstanding after the stock repurchase is completed?

Accepted Answer

A)   937 shares
B)   1,050 shares
C)   1,126 shares
D)   1,578 shares
E)   1,584 sharesF) A) and C)
G) B) and D)

Question 2

Which one of the following statements related to stock repurchases is correct?

Accepted Answer

A)   An open market stock repurchase increases the total wealth of a shareholder if you ignore taxes,costs,and market imperfections.
B)   Targeted repurchases must be offered to all shareholders but can be done in steps such that only a portion of the shareholders have the option to sell at any one point in time.
C)   When a firm wishes to repurchase shares in the open market,it will do so in a special trading session that is set up by the SEC.
D)   A firm may spend more cash over the course of a year on stock repurchases than it does on cash dividends.
E)   Tender offer prices must be set equal to the opening market price on the day the tender offer is announced.F) B) and D)
G) B) and C)

Question 3

Which one of the following is a result of a small stock dividend?

Accepted Answer

A)   increase in retained earnings
B)   decrease in total owner's equity
C)   decrease in cash
D)   decrease in capital in excess of par value
E)   increase in common stockF) All of the above
G) C) and D) E

Question 4

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?

Accepted Answer

A)   dividends
B)   distributions
C)   repurchases
D)   payments-in-kind
E)   stock splitsF) A) and B)
G) A) and C)

Question 5

Which one of the following statements related to stock repurchases is correct?

Accepted Answer

A)   U.S.industrial firms have increased their stock repurchases every year for each of the past twenty years.
B)   A stock repurchase can be used as a means for incumbent officers to retain control of a firm.
C)   A tender offer indicates that a firm is willing and able to purchase how ever many shares the current shareholders wish to sell.
D)   All stock repurchases must be identified as such to the selling party.
E)   Stock repurchases can be a relatively tax-efficient method of distributing cash to shareholders.F) A) and D)
G) A) and E)

Question 6

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?

Accepted Answer

A)   stock dividend
B)   stock split
C)   stock repurchase
D)   stock recap
E)   stock repealF) A) and C)
G) None of the above C

Question 7

Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share.The firm just announced a 4-for-3 stock split.How many shares of stock will be outstanding after the split?

Accepted Answer

A)   9,000 shares
B)   10,000 shares
C)   12,000 shares
D)   14,600 shares
E)   16,000 sharesF) A) and B)
G) A) and C)

Question 8

The Turtle Cave currently has 160,000 shares of stock outstanding that sell for $60 per share.Assume no market imperfections or tax effects exist.What will the new share price be if the firm declares a 10 percent stock dividend?

Accepted Answer

A)   $52.17
B)   $54.55
C)   $60.00
D)   $64.50
E)   $69.00F) B) and C)
G) A) and B)

Question 9

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?

Accepted Answer

A)   Friday,March 14
B)   Monday,March 17
C)   Wednesday,March 19
D)   Thursday,March 20
E)   Friday,March 21F) C) and E)
G) B) and E) D

Question 10

Stock splits can be used to:

Accepted Answer

A)   adjust the market price of a stock such that it falls within a preferred trading range.
B)   decrease the excess cash held by a firm thereby lowering agency costs.
C)   increase both the number of shares outstanding and the market price per share.
D)   increase the total equity of a firm.
E)   adjust the debt-equity ratio.F) A) and D)
G) B) and E)

Question 11

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

Accepted Answer

A)   ex-rights date
B)   ex-dividend date
C)   date of record
D)   date of payment
E)   declaration dateF) A) and B)
G) None of the above

Question 12

Explain the meaning of the dividend clientele effect and why it is important.

Accepted Answer

There are certain groups that prefer low...

Question 13

All else equal,the market value of a stock will tend to decrease by roughly the aftertax value of the dividend on the:

Accepted Answer

A)   dividend declaration date.
B)   ex-dividend date.
C)   date of record.
D)   date of payment.
E)   day after the date of payment.F) A) and D)
G) A) and C)

Question 14

Which one of the following statements correctly applies to U.S.industrial firms based on the period of 1984-2004?

Accepted Answer

A)   Earnings growth rates tend to lag dividend growth rates.
B)   Dividends tend to fluctuate significantly from quarter to quarter.
C)   The percentage of these firms paying dividends in 2004 was higher than in 1984.
D)   The total amount of dividends paid by these firms was greater in 2004 than in 1984.
E)   Non-dividend paying firms in 1984 were more apt to commence paying regular dividends than to implement a stock repurchase program.F) A) and E)
G) A) and D)

Question 15

Which of the following tends to increase the ability of a shareholder to create his or her own homemade dividend policy?
I.low taxes on capital gains
II.dividend reinvestment plans
III.large holdings of shares
IV.low cost equity purchases

Accepted Answer

A)   II only
B)   II and III only
C)   I,II,and III only
D)   II,III,and IV only
E)   I,II,III,and IVF) B) and C)
G) A) and B)

Question 16

You own 2,200 shares of Deltona Hardware.The company has stated that it plans on issuing a dividend of $0.42 a share at the end of this year and then issuing a final liquidating dividend of $2.90 a share at the end of next year.Your required rate of return on this security is 16 percent.Ignoring taxes,what is the value of one share of this stock to you today?

Accepted Answer

A)   $2.30
B)   $2.43
C)   $2.52
D)   $2.92
E)   $3.32F) C) and D)
G) A) and D)

Question 17

The equity of Blooming Roses has a total market value of $16,000.Currently,the firm has excess cash of $1,400 and net income of $15,400.There are 750 shares of stock outstanding.What will be the percentage change in the stock price per share if the firm pays out all of its excess cash as a cash dividend?

Accepted Answer

A)   -9.40 percent
B)   -8.75 percent
C)   -7.50 percent
D)   -2.75 percent
E)   0.00 percentF) A) and E)
G) C) and D)

Question 18

Tucker's National Distributing has a current market value of equity of $10,665.Currently,the firm has excess cash of $640,total assets of $22,400,net income of $3,210,and 500 shares of stock outstanding.Tucker's is going to use all of its excess cash to repurchase shares of stock.What will the stock price per share be after the stock repurchase is completed?

Accepted Answer

A)   $20.87
B)   $20.94
C)   $21.06
D)   $21.33
E)   $21.42F) B) and D)
G) A) and D)

Question 19

The owners' equity accounts for Blueswell Industries are shown here: 
If Blueswell Industries declares a 1-for-5 reverse stock split,there will be ____ shares outstanding at a par value of _____ per share.

Accepted Answer

A)   1,800;$1.00
B)   1,800;$5.00
C)   9,000;$5.00
D)   45,000;$0.20
E)   45,000;$1.00F) B) and C)
G) B) and E)

Question 20

Southern Fried Chicken has 8,000 shares of stock outstanding with a par value of $1 per share and a market value of $34 per share.The balance sheet shows $45,000 in the capital in excess of par account,$8,000 in the common stock account,and $152,000 in the retained earnings account.The firm just announced a 5 percent stock dividend.What will total owners' equity be after the dividend?

Accepted Answer

A)   $185,800
B)   $199,000
C)   $205,000
D)   $206,800
E)   $212,200F) B) and E)
G) None of the above

Exam 17: Dividends and Payout Policypart Seven: Short-Term Financial Planning and Management

Correct Answer
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Which one of the following statements related to stock repurchases is correct?

Correct Answer
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Which one of the following is a result of a small stock dividend?

Correct Answer
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E

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?

Correct Answer
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Which one of the following statements related to stock repurchases is correct?

Correct Answer
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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?

Correct Answer
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C

Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share.The firm just announced a 4-for-3 stock split.How many shares of stock will be outstanding after the split?

Correct Answer
verified

The Turtle Cave currently has 160,000 shares of stock outstanding that sell for $60 per share.Assume no market imperfections or tax effects exist.What will the new share price be if the firm declares a 10 percent stock dividend?

Correct Answer
verified

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?

Correct Answer
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D

Stock splits can be used to:

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

Correct Answer
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Explain the meaning of the dividend clientele effect and why it is important.

Correct Answer
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There are certain groups that prefer low...
View Answer

All else equal,the market value of a stock will tend to decrease by roughly the aftertax value of the dividend on the:

Correct Answer
verified

Which one of the following statements correctly applies to U.S.industrial firms based on the period of 1984-2004?

Correct Answer
verified

Which of the following tends to increase the ability of a shareholder to create his or her own homemade dividend policy? I.low taxes on capital gains II.dividend reinvestment plans III.large holdings of shares IV.low cost equity purchases

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The owners' equity accounts for Blueswell Industries are shown here: If Blueswell Industries declares a 1-for-5 reverse stock split,there will be shares outstanding at a par value of _ per share.

Correct Answer
verified

Correct Answer
verified

Exam 17: Dividends and Payout Policypart Seven: Short-Term Financial Planning and Management

Correct AnswerverifiedShow Answer

Which one of the following statements related to stock repurchases is correct?

Correct AnswerverifiedShow Answer

Which one of the following is a result of a small stock dividend?

Correct AnswerverifiedE

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?

Correct AnswerverifiedShow Answer

Which one of the following statements related to stock repurchases is correct?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedC

Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share.The firm just announced a 4-for-3 stock split.How many shares of stock will be outstanding after the split?

Correct AnswerverifiedShow Answer

The Turtle Cave currently has 160,000 shares of stock outstanding that sell for $60 per share.Assume no market imperfections or tax effects exist.What will the new share price be if the firm declares a 10 percent stock dividend?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedD

Stock splits can be used to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Explain the meaning of the dividend clientele effect and why it is important.

Correct AnswerverifiedThere are certain groups that prefer low...View AnswerShow Answer

All else equal,the market value of a stock will tend to decrease by roughly the aftertax value of the dividend on the:

Correct AnswerverifiedShow Answer

Which one of the following statements correctly applies to U.S.industrial firms based on the period of 1984-2004?

Correct AnswerverifiedShow Answer

Which of the following tends to increase the ability of a shareholder to create his or her own homemade dividend policy? I.low taxes on capital gains II.dividend reinvestment plans III.large holdings of shares IV.low cost equity purchases

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The owners' equity accounts for Blueswell Industries are shown here: If Blueswell Industries declares a 1-for-5 reverse stock split,there will be ____ shares outstanding at a par value of _____ per share.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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E

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C

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D

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Correct Answer
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Correct Answer
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There are certain groups that prefer low...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

The owners' equity accounts for Blueswell Industries are shown here: If Blueswell Industries declares a 1-for-5 reverse stock split,there will be shares outstanding at a par value of _ per share.

Correct Answer
verified

Correct Answer
verified