FRL301 17
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| . 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? | dividends Refer to section 17.1
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| 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? | distributions Refer to section 17.1
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| A $0.60 quarterly cash payment paid by T.L. Jones & Co. to its shareholders in the normal course of business is called a: | regular cash dividend. Refer to section 17.1
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| 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? | declaration date Refer to section 17.1
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| The ex-dividend date is defined as _____ business day(s) before the date of record. | 2 Refer to section 17.1
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| Which one of the following dates is used to determine the names of shareholders who will receive a dividend payment? | date of record Refer to section 17.1
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| Dividend payments are mailed on which one of the following dates? | date of payment Refer to section 17.1
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| 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? | homemade dividend policy. Refer to section 17.2
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| What is the information content effect? | the financial market's reaction to a change in the amount of a firm's dividend.Refer to section 17.5
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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? | stock repurchase. Refer to section 17.6
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| 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? | stock dividend Refer to section 17.8
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| Which one of the following does not affect the total equity of a firm but does increase the number of shares outstanding? | stock split. Refer to section 17.8
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| 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: | trading range. Refer to section 17.8
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| A reverse stock split is defined as: | a decrease in the number of shares outstanding that does not affect owner's equity. Refer to section 17.8
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| Which one of the following statements related to cash dividends is correct? | A dividend is never a liability until it has been declared. Refer to section 17.1
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| 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? | Wednesday, October 29 Refer to section 17.1
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| Taylor's Tools declared a $0.48 a 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? | Thursday, March 20 Refer to section 17.1
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| 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. | 3 Refer to section 17.1
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| All else equal, the market value of a stock will tend to decrease by roughly the aftertax value of the dividend on the: | ex-dividend date Refer to section 17.1
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| Which one of the following statements related to dividend policy is correct? | Dividend policy focuses on the timing of dividend payments. Refer to section 17.2
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| Automatic dividend reinvestment plans: | sometimes grant shareholders the privilege of purchasing additional shares at a discounted price.
III. help shareholders create their own homemade dividend policies.
IV. help make corporate dividend policies irrelevant to individual stockholders. (17.2)
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| 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 Refer to section 17.2
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| Which one of the following favors a low dividend policy? | the tax on capital gains is deferred until the gain is realized. Refer to section 17.3
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| The fact that flotation costs can be significant is an argument for: | maintaining a low dividend policy and rarely issuing extra dividends .Refer to section 17.3
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| Which of the following tend to keep dividends low? | II. terms contained in bond indenture agreements
III. the desire to maintain constant dividends over time
IV. flotation costs. section 17.3
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| Which of the following shareholders tend to favor a high dividend policy? | I. retired individuals
II. endowment funds
III. corporate investors. Refer to section 17.4
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| An investor is more likely to prefer a high dividend payout if a firm: | has few, if any, positive net present value projects. Refer to section 17.4
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| The information content of a dividend increase generally signals that: | management believes earnings growth will be strong going forward. Refer to section 17.5
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| S.L. Moffatt, Inc. has paid a quarterly dividend of $1.20 per share for the last ten quarters. Which one of the following is most apt to cause the firm to reduce the amount of its next dividend payment? | loss of a major customer which lowers the firm's outlook for the next few years. Refer to section 17.5
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| The dividend market is in equilibrium when: | all clienteles are satisfied. Refer to section 17.5
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| Which one of the following statements related to stock repurchases is correct? | A firm may spend more cash over the course of a year on stock repurchases than it does on cash dividends. Refer to section 17.6
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| Which one of the following statements related to stock repurchases is correct? | Stock repurchases can be a relatively tax-efficient method of distributing cash to shareholders. Refer to section 17.6
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| A stock repurchase program: | is essentially the same as a cash dividend program provided there are no taxes or other costs. Refer to section 17.6
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| Which one of the following is a result of a stock repurchase? | PE ratio equal to that resulting from a comparable cash dividend. Refer to section 17.6
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| If you ignore taxes and costs, a stock repurchase will: | I. reduce the total assets of a firm.
IV. reduce the total equity of a firm. Refer to section 17.6
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| Which one of the following statements appears to be supported by the current dividend policies of U.S. industrial firms? | Dividends are still viewed by shareholders as a signal of a firm's future outlook .Refer to section 17.7
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| Which one of the following statements is correct? | Maintaining a steady dividend is a key goal of most dividend-paying firms. Refer to section 17.7
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| Which of the following balance sheet accounts are affected by a small stock dividend? | II. common stock
III. retained earnings
IV. capital in excess of par value. Refer to section 17.8
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| A small stock dividend is defined as a stock dividend of less than _____ percent. | 20 to 25
Refer to section 17.8
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| Which one of the following is a result of a small stock dividend? | increase in common stock. Refer to section 17.8
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| Which of the following account balance changes occur as a result of a large stock dividend? | I. increase in common stock.
IV. decrease in retained earnings
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| The firm wishes to do something to acknowledge the loyalty of the shareholders but needs all of its available cash to fund the firm's rapid growth. The market price of the stock is currently trading at the upper end of its preferred trading range. What? | stock split. Refer to section 17.8
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| Which two of the following are the best justifications for a reverse stock split? | I. combine a reverse stock split with a stock repurchase to enable a firm to go dark
III. avoid delisting Refer to section 17.8
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| A stock split: | decreases the market value per share. Refer to section 17.8
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| Stock splits can be used to: | adjust the market price of a stock such that it falls within a preferred trading range. Refer to section 17.8
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| Which one of the following is a direct result of a 2-for-1 stock split? | a 50 percent decrease in the par value per share Refer to section 17.8
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| . Sligo Minerals stock is currently trading at $6 a share. The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares. The firm should consider a: | reverse stock split Refer to section 17.8
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| A one-for-four reverse stock split will: | increase a $1 par value to $4. Refer to section 17.8
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| A firm wants to maintain a minimum stock price of $15 a share. Due to a recent market downturn, the stock is currently selling for $6 a share. The firm should consider a: | 1-for-3 reverse stock split. Refer to section 17.8
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| Plyler Cabinets declared a dividend of $1.20 a share on May 15 to holders of record on Monday, June 1. Dividend is payable on June 15. Sara purchased 500 shares of the stock on Friday, May 29. How much dividend income will she receive on June 15? | $0. Sara will not receive any dividend income because she purchased the shares after the ex-dividend date.
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