公司理财精要题库.doc

Chapter 14 - Dividends and Dividend PolicyChapter 14Dividends and Dividend Policy Multiple Choice Questions1.Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firms shareholders?A.InterestB.DistributionC.Retained earningsD.DividendE.Stock repurchase2.Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?A.InterestB.DistributionC.Retained earningsD.DividendE.Stock repurchase3.Which one of the following best defines a regular cash dividend?A.Distribution by a firm to its shareholdersB.Payment from any source by a firm to its ownersC.One-time payment of cash by a firm to its shareholdersD.Cash payment by a firm to its owners as part of a firms normal operationsE.Distribution of the proceeds from the sale of a portion of a firms operations4.Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?A.Date of recordB.Ex-dividend dateC.Payment dateD.Declaration dateE.Public announcement date5.The ex-dividend date is defined as _ day(s) before the date of record.A.three businessB.threeC.two businessD.twoE.one6.On which one of the following dates is the determination made as to which shareholders will receive a dividend payment?A.Date of recordB.Ex-dividend dateC.Payment dateD.Declaration dateE.Public announcement date7.On which one of the following dates are dividend checks mailed?A.Date of recordB.Ex-dividend dateC.Payment dateD.Declaration dateE.Public announcement date8.The clientele effect states that investors fall into various groups because of differences in their preferences for which one of the following?A.Share price levelsB.Risk levelC.Short-term versus long-term investmentsD.Rates of returnE.Dividends9.This morning, Lambert Materials bought 10,000 of its outstanding shares in the open market. What type of transaction was this?A.Stock payoutB.Stock distributionC.Stock dividendD.Stock repurchaseE.Stock reversal10.Which one of the following is a non-cash payment made by a firm to its shareholders and is a payment that lessens the value of each outstanding share?A.Reverse stock splitB.Cash distributionC.Stock dividendD.Regular dividendE.Liquidating dividend11.Which one of the following increases the number of shares outstanding but does not increase the value of owners equity?A.Stock repurchaseB.Reverse stock splitC.Stock splitD.Cash distributionE.Liquidating dividend12.During the past year, ABC stock has sold for as little as $19 a share and a much as $33 a share. Which one of the following terms applies to these prices?A.Benchmark valuesB.Price splitsC.Price dividersD.Split rangeE.Trading range13.Which one of the following reduces the number of shares outstanding but does not change a firms total equity?A.Stock splitB.DistributionC.Reverse splitD.LiquidationE.Redemption14.Lesters Dry Goods paid $1.10 per share in dividends last year. The company currently has excess cash and would like to distribute $0.40 a share to its shareholders. However, the company is concerned about increasing the dividend by that amount as it will not be able to afford any increase in the future and doesnt want to lower the dividend once it has been raised. Which one of the following is probably the best suggestion for distributing the $0.40 per share?A.Special dividend of $0.40 per shareB.Extra cash dividend of $0.40 per shareC.Liquidating dividend of $0.40 per shareD.Increase the regular dividend by $0.11 and pay a special dividend of $0.29E.Increase the regular dividend by $0.11 and pay an extra cash dividend of $0.2915.Downtown Merchants has paid a quarterly dividend of $0.60 per share for the past two years. This quarter, the firm plans to pay $0.60 plus an additional $0.05. The firm has stated that it uncertain whether it will pay $0.60 or $0.65 per share next quarter. Which one of the following is the best description of the additional $0.05 that is being paid this quarter?A.Liquidating dividendB.Special dividendC.Extra dividendD.Stock dividendE.Normal dividend16.Which one of the following is an example of a liquidating dividend?A.Valley Feed Mills recently sold its grain storage facility and is distributing the proceeds of that sale to its shareholders.B.Kates Winery has excess cash that it wishes to distribute to its shareholders in addition to its normal cash dividend. This extra distribution usually occurs about once every year.C.Kurts Music is planning to increase its quarterly dividend by three percent.D.The Dried Florist is preparing to pay its first annual dividend of $0.08 per share.E.Hi Tek had an extraordinarily profitable year and has decided to do a one-time only $10 per share cash dividend.17.Which one of the following events must occur before a firm can offer a liquidating dividend?A.Bankruptcy filingB.Insolvency declarationC.Asset saleD.Negative equityE.Failed bond issue18.Kelsey International declared a dividend on Friday, November 13, that is payable on Friday, December 4, to holders of record on Monday, November 30. What is the latest date that you can purchase this stock if you wish to receive this dividend? Assume there are no banking holidays within this period of time.A.Tuesday, November 24B.Wednesday, November 25C.Thursday, November 26D.Friday, November 27E.Monday, November 3019.Which one of the following dates is the date on which the board of directors votes to pay a dividend?A.Record dateB.Declaration dateC.Ex-dividend dateD.Payment dateE.Settlement date20.Tuesday, December 1, is the ex-dividend date for Alpha stock. Which one of the following dates is the record date? Assume there are no banking holidays to consider.A.Friday, November 27B.Monday, November 30C.Wednesday, December 2D.Thursday, December 3E.Friday, December 421.Chelsie Enterprises declared a dividend to shareholders of record on Monday, February 8, that is payable on Friday, February 26. Carla knows that her dividend check normally arrives three business days after the check is written. On which one of the following days should she expect to receive her dividend check?A.Wednesday, February 10B.Thursday, February 11C.Monday, March 1D.Tuesday, March 2E.Wednesday, March 322.Davidson Interiors declared a dividend to holders of record on Thursday, October 15, that is payable on Monday, November 2. Suenette purchased 200 shares of Davidson Interiors stock on Monday, October 12 and Jake purchased 100 shares of this stock on the following day. Which one of the following statements is correct given this information?A.Both Suenette and Jake will receive this dividend.B.Suenette will receive the dividend but Jake will not.C.Jake will receive the dividend but Suenette will not.D.Neither Suenette nor Jake will receive this dividend.E.You cannot determine who will or will not receive this dividend based on the information provided.23.Twelve days ago, DOG, Inc. declared a dividend of $1.34 a share. The ex-dividend date is tomorrow. All else constant, which one of the following is the best estimate of DOG, Inc.s opening stock price tomorrow?A.$1.34 lower than todays closing priceB.todays closing price minus an amount approximately equal to the aftertax value of the dividendC.the same as todays closing price since the dividend is expectedD.$1.34 higher than todays closing priceE.todays closing price plus an amount approximately equal to the aftertax value of the dividend24.Which one of the following statements is correct?A.Dividends are irrelevant.B.Flotation costs are a good reason to support a high dividend payout.C.Current tax laws favor high current dividends for individual investors.D.Dividend policy is the time pattern of dividend payout.E.Corporate investors tend to prefer low dividend payouts on securities they own.25.Which one of the following is an argument that dividend policy is irrelevant?A.Flotation costs as they apply to equities.B.Tax laws as they currently exist.C.An unsatisfied demand for high-dividend paying stocks.D.Current equilibrium in the clientele dividend market.E.The current tax exclusion available to corporate investors.26.Which one of the following statements is correct concerning the taxation of dividends and capital gains?A.Seventy percent of capital gains derived from stock investments are tax exempt for corporate investors.B.Dividends are a form of tax-exempt income for individual investors.C.All investors are subject to the same tax rate on dividend income.D.Individual investors can defer taxation on both dividends and capital gains.E.As of 2003, individual investors pay a 15 percent tax on both dividends and capital gains.27.Which one of the following would tend to favor a low dividend payout?A.Higher tax rates on capital gains than on dividend incomeB.High flotation cost for equity issuesC.Endowment fund investors who cannot spend principalD.Investors desire for a high dividend yieldE.Elimination of the tax-deferral on capital gains28.Which two of the following tend to limit the amount of dividends that can be paid by a leveraged corporation? I. current tax lawsII. corporate tax exclusionIII. bond indenture covenantIV. state laws pertaining to retained earningsA.I and II onlyB.I and III onlyC.II and III onlyD.II and IV onlyE.III and IV only29.As of 2003, the maximum tax rate on long-term capital gains for high-income individuals was which one of the following rates?A.10 percentB.15 percentC.20 percentD.35 percentE.39 percent30.Which one of the following factors favors a high dividend payout?A.Low transaction costs on stock tradesB.Lower taxes on capital gains than on dividendsC.Tax deferment on capital gains, but not on dividend incomeD.Flotation costsE.Corporate shareholders31.What percent of capital gains are excluded from taxation for corporate shareholders?A.0 percentB.10 percentC.25 percentD.70 percentE.75 percent32.Phil is reviewing ABC Companys dividend policy as it relates to the firms shareholders. As part of this review, he wants to divide shareholders into two basic categories in respect to dividend payments. The first group will be shareholders who are taxed on dividend income and the second group will be shareholders who receive some form of tax break on dividend income. Which of the following types of shareholders should be placed in the tax-favored second group? I. corporateII. pension fundIII. individualsIV. trust fundsA.I onlyB.III onlyC.I and III onlyD.II and IV onlyE.I, II, and IV only33.Assume that clienteles exist. Given this assumption, which one of the following statements is correct?A.A firm can increase its share price by increasing its dividend payout.B.Dividend policy is irrelevant as long as each clientele group is currently satisfied.C.All firms will adopt a high dividend payout policy.D.All dividends become irrelevant.E.All firms should adopt a low dividend payout policy.34.Martin & Martin, Inc. stock is currently selling for $19 per share. The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $25 per share. What type of offer is being made?A.Rights offerB.Secondary issueC.Targeted repurchaseD.Tender offerE.Private issue35.Joseph Turner and Sons has 125,000 shares of stock outstanding. The firm has extra cash so it announced this morning that it is willing to repurchase 25,000 of its shares. What type of offer is the firm making?A.Rights offerB.Secondary issueC.Targeted repurchaseD.Tender offerE.Private issue36.Which of the following are means by which a firm can reduce its number of outstanding shares? I. open market purchaseII. rights offerIII. tender offerIV. targeted repurchaseA.IV onlyB.I and IV onlyC.II, III, and IV onlyD.I, III and IV onlyE.I, II, III, and IV37.Kelsos is considering spending $80,000 on either a stock repurchase or an extra cash dividend. Which one of the following values will be the same whether the firm pays a dividend or repurchases stock? Assume there are no taxes or market imperfections.A.Number of shares outstandingB.Price per shareC.Earnings per shareD.Price-earnings ratioE.Market value of equity per share38.Which one of the following will result from a stock repurchase?A.Increase in the number of shares outstandingB.Decrease in the earnings per shareC.Decrease in the market price per shareD.Increase in the market value of equity per shareE.Decrease in the P/E ratio39.Elkins Feed Lot is an all-equity firm with positive net income. Which one of the following will result if the firm pays a cash dividend?A.Number of shares outstanding will increaseB.Earnings per share will decreaseC.Total assets will remain constantD.Price-earnings ratio will decreaseE.Total equity will increase40.Assume there are no taxes or imperfections. Given this assumption, which one of the following statements is correct?A.A cash dividend has no effect on the market price of the payers stock.B.A cash dividend decreases shareholder wealth.C.Stock repurchases decrease the market value per share.D.Both a cash dividend and a share repurchase increase a firms PE ratio.E.A stock repurchase has the same effect on a firms market value balance sheet as does a cash dividend.41.Given the current tax laws, which one of the following statements is correct?A.Both stock repurchases and cash dividends are treated equally for tax purposes for individual shareholders.B.Stock repurchases give individual shareholders more control over their personal taxes than do cash dividends.C.Cash dividends are preferable to stock repurchases from the individual shareholder point of view.D.Stock repurchases offer more tax benefits to the issuer than do cash dividends.E.Cash dividends offer more tax benefits than do stock repurchases for the issuer.42.Which one of the following statements related to stock buybacks is correct?A.Stock buybacks are a means of obtaining shares for employee stock option grants.B.Stock buybacks are becoming rare and may soon disappear totally.C.In 2007 and 2008,