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Exam 14: Dividends and Dividend Policy

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Question 41

Multiple Choice

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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 levels
B) Risk level
C) Short-term versus long-term investments
D) Rates of return
E) Dividends

F) A) and E)
G) A) and D)

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Question 42

Multiple Choice

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LaDoris' Boutique has 4,500 shares of stock outstanding at a price per share of $20.The firm has decided to repurchase 600 of those shares in the open market.What will the price per share be after the share repurchase is completed? Ignore taxes and market imperfections.

A) $17.80
B) $18.40
C) $18.80
D) $20.00
E) $20.20

F) B) and D)
G) D) and E)

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Question 43

Multiple Choice

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On which one of the following dates is the determination made as to which shareholders will receive a dividend payment?

Doris' Boutique has 4,000 shares of stock outstanding at a price per share of $15.What will the price per share be if the firm pays a $1.30 per share dividend? Ignore taxes and market imperfections.

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?

You are having a discussion with one of your classmates on dividend policy.Your classmate states that dividend policy is totally irrelevant.Write a response to this statement justifying that in the real world,dividend policy does matter.

The owners' equity accounts for Boats and More are shown here: Assume Boats and More stock currently sells for $38 per share and a 10 percent stock dividend is declared.What will be the new common stock account value?

Which one of the following is basically equivalent to a 2-for-1 stock split?

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.

Rochester,Inc.has 7,500 shares of stock outstanding at a market price of $42 each and earnings per share of $1.90.The firm has decided to repurchase $63,000 worth of stock.What will the PE ratio be after the repurchase,all else held constant?

Assume that clienteles exist.Given this assumption,which one of the following statements is correct?

Explain why a firm might prefer a stock repurchase rather than an increase in the firm's regular dividend.

This morning,Lambert Materials bought 10,000 of its outstanding shares in the open market.What type of transaction was this?

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

Which one of the following statements is correct?

Cookies and Cream has 9,000 shares of stock outstanding at a market price of $14.65 per share.What will the price per share be after the firm declares a 12 percent stock dividend? Ignore taxes and market imperfections.

Which two of the following tend to limit the amount of dividends that can be paid by a leveraged corporation? I.Current tax laws II.Corporate tax exclusion III.Bond indenture covenant IV.State laws pertaining to retained earnings

Which one of the following is a noncash payment made by a firm to its shareholders and is a payment that lessens the value of each outstanding share?

Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?

Obama and Biden International just announced it will be paying an annual dividend of $0.90 a share plus an extra dividend of $0.30 a share this year.The company also announced that its regular dividend,which is all it anticipates paying after this year,will increase by 4.5 percent annually.What is the anticipated dividend per share next year?