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Tri 2 2018/2019 BBF 2124 Financial Management II
Chapter 14
P14- 2 Dividend payment
Sandra Gray owns 800 shares of Steel & Fittings Corporation. At the annual dividend
meeting, a dividend payment of $1.05 was declared to be paid on September 30 to all the
holders of record as at September 9.
a. What is the amount of the dividend Sandra would receive on September 30?
b. If Sandra increased her stockholding to 900 shares on September 10, what is the
amount of the dividend she would receive on September 30?
c. What effect does declaring this dividend have on stock prices on September 7?
d. If Sandra sold 200 shares for a total of $1,000 on September 15, what is the amount of
the dividend she would receive on September 30?
P14- 3 Residual dividend policy
The new intern is trying to understand the dividend policy of your firm. Having studied
dividend policies at university, the intern wonders why the firm chose its dividend policy.
The intern also wants to know how to estimate the dividend amount likely to be paid the
following year. The following limited information is available:
(1) The firm follows a residual dividend policy.
