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Chapter 17
Dividends and Payout Policy
Multiple Choice Questions
1.
Green Roof Motels has more cash on hand than its operations require.
Thus, the firm has decided to pay out some of its earnings in the form of
cash to its shareholders. What are these payments to shareholders called?
2.
Lester's Frozen Foods just paid out $0.50 a share to its shareholders. The
cash for these payments came from a large sale of assets, not from any
earnings of the firm. What are these payments to shareholders called?
3.
A $0.60 quarterly cash payment paid by T.L. Jones & Co. to its shareholders
in the normal course of business is called a:
4.
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?
5.
The ex-dividend date is defined as _____ business day(s) before the date of
record.
6.
Which one of the following dates is used to determine the names of
shareholders who will receive a dividend payment?
7.
Dividend payments are mailed on which one of the following dates?
8.
Which one of the following refers to the ability of shareholders to undo a
firm's dividend policy and create an alternative dividend policy by
reinvesting dividends or selling shares of stock?
9.
What is the information content effect?
10.
The common stock of Pierson Enterprises has historically had a high
dividend yield and is expected to continue to do so. As a result, the majority
of its shareholders are individuals and entities that are seeking a regular
source of cash income. Most of these shareholders pay either no taxes or a
relatively low amount of taxes. The fact that most of these shareholders
have similar characteristics is referred to by which one of the following
terms?
11.
HJ Corporation has excess cash and has opted to buy some of its shares of
outstanding common stock. What is this process of buying called?
12.
Which one of the following involves a payment in shares by a stock issuer
that increases the number of shares a shareholder owns but also decreases
the value per share?
13.
Which one of the following does not affect the total equity of a firm but
does increase the number of shares outstanding?
14.
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:
15.
A reverse stock split is defined as:
16.
Which one of the following statements related to cash dividends is correct?
17.
Billingsley United declared a $0.20 a share dividend on Thursday, October
16. The dividend will be paid on Monday, November 10 to shareholders of
record on Friday, October 31. Which one of the following is the ex-dividend
date?
18.
Taylor's Tools declared a $0.48 per share dividend on Friday, March 7. The
dividend will be paid on Monday, April 7. The ex-dividend date is Tuesday,
March 18. What is the record date?
19.
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.
20.
Kate purchased 500 shares of Fast Deliveries stock on Wednesday, July 7th.
Ted purchased 100 shares of Fast Deliveries stock on Thursday, July 8th.
Fast Deliveries declared a dividend on June 20th to shareholders of record
on July 12th and payable on August 1st. Which one of the following
statements concerning the dividend paid on August 1st is correct given this
information?
