Question 1

If you ignore taxes and costs,a stock repurchase will:
I.reduce the total assets of a firm.
II.decrease the earnings per share.
III.reduce the PE ratio more so than an equivalent stock dividend.
IV.reduce the total equity of a firm.

Accepted Answer

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

Question 2

Revol-Tech is a technology firm with excellent growth prospects.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.The firm is most apt to consider which one of the following in this situation?

Accepted Answer

A)   liquidating dividend
B)   stock split
C)   reverse stock split
D)   small stock dividend
E)   special cash dividendF) B) and D)
G) A) and E)

Question 3

The market value balance sheet for Inbox Manufacturing is shown here.Inbox has declared a 15 percent stock dividend.The stock goes ex-dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend) .There are 13,000 shares outstanding.What is the ex-dividend stock price?

Accepted Answer

A)   $23.51
B)   $25.15
C)   $25.51
D)   $26.86
E)   $28.92F) All of the above
G) D) and E)

Question 4

Mario's has 18,000 shares of stock outstanding with a par value of $1 per share and a market price of $4 a share.The balance sheet shows $18,000 in the common stock account,$368,000 in the paid in surplus account,and $64,000 in the retained earnings account.The firm just announced a 5-for-1 stock split.What will the paid in surplus account value be after the split?

Accepted Answer

A)   $336,000
B)   $368,000
C)   $426,000
D)   $548,000
E)   $606,000F) A) and E)
G) None of the above

Question 5

South Shore Limited has 21,000 shares of stock outstanding with a par value of $1 per share and a market price of $7.50 a share.The firm just announced a 5-for-2 stock split.What will the par value of the stock be after the split?

Accepted Answer

A)   $0.40
B)   $0.80
C)   $1.00
D)   $1.40
E)   $1.60F) C) and D)
G) B) and D)

Question 6

East Coast Marina has 220,000 shares of stock outstanding.The current market value of the firm is $18.92 million.The company has retained earnings of $3.8 million,paid in surplus of $6.7 million,and a common stock account value of $220,000.The company is planning a 3-for-2 stock split.What will the market price per share be after the split?

Accepted Answer

A)   $28.67
B)   $57.33
C)   $66.67
D)   $108.00
E)   $129.00F) A) and E)
G) A) and D)

Question 7

A reverse stock split is defined as:

Accepted Answer

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.F) B) and D)
G) A) and B)

Question 8

Webster United is paying a $1.10 per share dividend today.There are 350,000 shares outstanding with a market price of $25 per share.Ignore taxes.Before the dividend,the company had earnings per share of $1.74.As a result of this dividend,the:

Accepted Answer

A)   retained earnings will decrease by $350,000.
B)   retained earnings will increase by $385,000.
C)   total firm value will not change.
D)   earnings per share will increase to $2.84.
E)   price-earnings ratio will be 13.74.F) D) and E)
G) A) and D)

Question 9

The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding. 
The company has declared a dividend of $1.80 per share.The stock goes ex-dividend tomorrow.Ignore any tax effects.What will the price of the stock be tomorrow?

Accepted Answer

A)   $18.90
B)   $36.20
C)   $39.60
D)   $52.15
E)   $71.80F) A) and E)
G) C) and D)

Question 10

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

Accepted Answer

A)   repurchase.
B)   liquidating dividend.
C)   regular cash dividend.
D)   special dividend.
E)   extra cash dividend.F) C) and E)
G) D) and E)

Question 11

Josh's,Inc.has 7,000 shares of stock outstanding with a par value of $1.00 per share and a market value of $32 a share.The balance sheet shows $82,000 in the capital in excess of par account,$7,000 in the common stock account,and $64,800 in the retained earnings account.The firm just announced a 10 percent stock dividend.What is the value of the capital in excess of par account after the dividend?

Accepted Answer

A)   $76,000
B)   $82,000
C)   $97,700
D)   $103,700
E)   $104,400F) B) and D)
G) A) and D)

Question 12

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.

Accepted Answer

A)   1
B)   2
C)   3
D)   4
E)   5F) A) and B)
G) A) and C)

Question 13

The Olive Vase has 56,000 shares of stock outstanding with a par value of $1 per share and a market value of $11 a share.The company just announced a 3-for-4 reverse stock split.Currently,you own 500 shares of this stock.What will the total value of your shares be after the reverse stock split?

Accepted Answer

A)   $3,300
B)   $4,400
C)   $5,500
D)   $5,867
E)   $6,333F) A) and B)
G) D) and E)

Question 14

Randall's,Inc.has 20,000 shares of stock outstanding with a par value of $1.00 per share.The market value is $12 per share.The balance sheet shows $42,000 in the capital in excess of par account,$20,000 in the common stock account,and $50,500 in the retained earnings account.The firm just announced a 5 percent (small) stock dividend.What will the balance in the retained earnings account be after the dividend?

Accepted Answer

A)   $38,500
B)   $39,500
C)   $50,500
D)   $61,500
E)   $62,500F) B) and C)
G) B) and D)

Question 15

Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

Accepted Answer

A)   $16.80
B)   $21.60
C)   $28.00
D)   $46.67
E)   $56.00F) A) and B)
G) A) and C)

Question 16

Cooper Brands,Inc. ,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Accepted Answer

A)   $50.40
B)   $58.20
C)   $62.50
D)   $78.75
E)   $82.50F) B) and D)
G) C) and D)

Question 17

The Peace River Corporation has 62,000 shares of stock outstanding at a market price of $48 a share.The company has just announced a 3-for-2 stock split.How many shares of stock will be outstanding after the split?

Accepted Answer

A)   41,333 shares
B)   54,333 shares
C)   89,333 shares
D)   93,000 shares
E)   100,500 sharesF) C) and D)
G) A) and C)

Question 18

The dividend market is in equilibrium when:

Accepted Answer

A)   all firms adopt a low dividend policy.
B)   half of the firms adopt a low dividend policy and half adopt a high dividend policy.
C)   all clienteles are satisfied.
D)   dividends remain constant and no special dividends are declared.
E)   the total amount of the annual dividends is equal to the net income for the year.F) None of the above
G) A) and B)

Question 19

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?

Accepted Answer

A)   decision date
B)   date-of-record
C)   declaration date
D)   payment date
E)   ex-dividend dateF) A) and B)
G) B) and C)

Question 20

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:

Accepted Answer

A)   price variance.
B)   bid-ask spread.
C)   trading range.
D)   opening price.
E)   closing price.F) A) and C)
G) D) and E)

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

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A reverse stock split is defined as:

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The dividend market is in equilibrium when:

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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:

Correct Answer
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Webster United is paying a $1.10 per share dividend today.There are 350,000 shares outstanding with a market price of $25 per share.Ignore taxes.Before the dividend,the company had earnings per share of $1.74.As a result of this dividend,the:

Correct Answer
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The Olive Vase has 56,000 shares of stock outstanding with a par value of $1 per share and a market value of $11 a share.The company just announced a 3-for-4 reverse stock split.Currently,you own 500 shares of this stock.What will the total value of your shares be after the reverse stock split?

Correct Answer
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If you ignore taxes and costs,a stock repurchase will: I.reduce the total assets of a firm. II.decrease the earnings per share. III.reduce the PE ratio more so than an equivalent stock dividend. IV.reduce the total equity of a firm.

Correct Answer
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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.

Correct Answer
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Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

Correct Answer
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South Shore Limited has 21,000 shares of stock outstanding with a par value of $1 per share and a market price of $7.50 a share.The firm just announced a 5-for-2 stock split.What will the par value of the stock be after the split?

Correct Answer
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Correct Answer
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Cooper Brands,Inc. ,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Correct Answer
verified

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?

Correct Answer
verified

The Peace River Corporation has 62,000 shares of stock outstanding at a market price of $48 a share.The company has just announced a 3-for-2 stock split.How many shares of stock will be outstanding after the split?

Correct Answer
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Correct Answer
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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:

Correct Answer
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The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding. The company has declared a dividend of $1.80 per share.The stock goes ex-dividend tomorrow.Ignore any tax effects.What will the price of the stock be tomorrow?

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A reverse stock split is defined as:

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Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The dividend market is in equilibrium when:

Correct AnswerverifiedShow Answer

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:

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Webster United is paying a $1.10 per share dividend today.There are 350,000 shares outstanding with a market price of $25 per share.Ignore taxes.Before the dividend,the company had earnings per share of $1.74.As a result of this dividend,the:

Correct AnswerverifiedShow Answer

The Olive Vase has 56,000 shares of stock outstanding with a par value of $1 per share and a market value of $11 a share.The company just announced a 3-for-4 reverse stock split.Currently,you own 500 shares of this stock.What will the total value of your shares be after the reverse stock split?

Correct AnswerverifiedShow Answer

If you ignore taxes and costs,a stock repurchase will: I.reduce the total assets of a firm. II.decrease the earnings per share. III.reduce the PE ratio more so than an equivalent stock dividend. IV.reduce the total equity of a firm.

Correct AnswerverifiedShow Answer

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.

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Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

Correct AnswerverifiedShow Answer

South Shore Limited has 21,000 shares of stock outstanding with a par value of $1 per share and a market price of $7.50 a share.The firm just announced a 5-for-2 stock split.What will the par value of the stock be after the split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cooper Brands,Inc. ,has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The Peace River Corporation has 62,000 shares of stock outstanding at a market price of $48 a share.The company has just announced a 3-for-2 stock split.How many shares of stock will be outstanding after the split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding. The company has declared a dividend of $1.80 per share.The stock goes ex-dividend tomorrow.Ignore any tax effects.What will the price of the stock be tomorrow?

Correct AnswerverifiedShow Answer

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