Economics Chapter 18 2 Maturity Stage Firm Growing About

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70. Which of the following is NOT true about the life-cycle growth and dividend policy?

71. In Stage II (the growth stage), sales and returns on assets will be growing at increasing rates. Which of

the following is true?

72. In the maturity stage, a firm

73. In the initial stage (Stage I), the corporation

74. When a firm enters Stage III of its life cycle, which of the following is NOT likely to be observed?

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75. When a firm enters Stage IV of its life cycle,

76. Stockholders may prefer cash dividends to reinvestment

77. A major desire of stockholders regarding dividend policy is

78. Which of the following does not affect a company’s dividend policy?

79. Firm X has declared a stock dividend that pays one share of stock for every five shares owned. After

the stock dividend, earnings per share will

80. The American Taxpayer Relief Act of 2013

81. Which of the following generally does NOT influence the dividend policy of the firm?

82. Lucas Inc. earned $15 million last year and retained $6 million. Lucas has 5 million shares outstanding,

and the current price of Lucas shares is $30 per share. What is the dividend payout ratio?

83. Mirrlees Furniture earned $750,000 last year and had a 30% dividend payout ratio. How much did the

firm add to its retained earnings?

84. The “ex-dividend date” is the date

85. According to the law, dividends may be funded from

86. A stock dividend will

87. A stock dividend will

88. CBA Inc has 400,000 shares outstanding with a $5 par value. The shares were issued for $12. The

stock is currently selling for $34. CBA has $5,000,000 in retained earnings and has declared a stock

dividend that will increase the number of outstanding shares by 6%. What will be the “capital in excess of

par account” after the stock dividend?

89. CBA Inc has 400,000 shares outstanding with a $5 par value. The shares were issued for $12. The

stock is currently selling for $34. CBA has $5,000,000 in retained earnings and has declared a stock

dividend that will increase the number of outstanding shares by 6%. What will be the “common stock”

account after the stock dividend?

90. CBA Inc has 400,000 shares outstanding with a $5 par value. The shares were issued for $12. The

stock is currently selling for $34. CBA has $5,000,000 in retained earnings and has declared a stock

dividend that will increase the number of outstanding shares by 6%. How many shares will be outstanding

after the stock dividend?

91. The primary purpose of a stock split is to

92. Which of the following balance sheet accounts will be affected by a stock dividend but not by a stock

split?

93. A 2-for-1 stock split is declared. In this case, which of the following statements is true?

94. The stockholders‘ equity section of the balance sheet of the XYZ Corp. is as follows:

If the company now splits its stock 3–for-1, which of the following is correct?

95. A stock split

96. At what payout percentage is a stock dividend typically considered a stock split, in accordance with the

recommendation of the Financial Accounting Standards Board?

97. A reverse stock split

98. Reverse stock splits take place in many cases

99. A firm with excess cash and few investment alternatives might logically

100. A firm may repurchase its own stock in the market because

101. Management may repurchase shares of its own stock in the market

102. A corporation may wish to repurchase some of its shares for all of the following reasons EXCEPT:

103. Some dividend reinvestment plans allow the stockholder to acquire shares of stock

104. All of the following uses of annual earnings would contribute toward an increase in shareholder value

EXCEPT:

105. A firm will repurchase its own shares in the market because

106. Which of the following is NOT a benefit of dividend reinvestment plans to firms?

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Chapter 18 Test Bank – Static Summary