DividendpolicyMCQs
1.Apaymentofeithercashorstockoutofacorporation'searningstoafirm'sownersis
calleda(n):
a.normaldistribution.
b.retaineddistribution.
c.operatingdistribution.
D.dividend.
e.repurchase.
2.Apaymentbyafirmtoitsownersfromanysourceotherthancurrentoraccumulated
retainedearningsisreferredtoasa:
a.capitalliquidation.
B.distribution.
c.specialdividend.
d.repurchase.
e.stockdividend.
3.Ifafirmmaintainsitspreferreddebtequityratioandpaysdividendsonlyaftermeeting
itsinvestmentneeds,thefirmisfollowingadividendpolicywhichisreferredtoasa
_____dividendpolicy.
a.stable
B.residual
c.constant
d.remainder
e.leftover
4.Whatisthenamegiventoatransactionwhereinafirmbuyssomeofitsown
outstandingsharesofstock?
a.stockpayout
b.reversedistribution
c.stockdividend
D.repurchase
e.acquisition
5.Whichoneofthefollowingisanoncashpaymentmadebyafirmtoitsshareholders
thatdilutesthevalueofeachshareofstockoutstanding?
a.reversestocksplit
b.cashdistribution
C.stockdividend
d.regulardividend
e.liquidatingdividend
6.Whichoneofthefollowingincreasesthenumberofsharesoutstandingwithout
increasingthevalueoftheowners'equity?
a.stockrepurchase
b.reversestocksplit
C.stocksplit
d.cashdistribution
e.liquidatingdividend
7.GlobalMetals,Inc.paysaquarterlydividendthatisbasedonaconstantpercentageof
annualearnings.Thedividendsforeachyearareequalinamount.Whattypeofdividend
policydoesthisfirmhave?
a.residual
b.special
c.cyclical
D.stable
e.extra
8.MorgantownMerchantsisanallequityfirmwithpositivenetincome.Whichoneof
thefollowingwillresultifthefirmpaysacashdividend?
a.thenumberofsharesoutstandingwillincrease
b.theearningspersharewilldecrease
c.totalassetswillremainconstant
D.thepriceearningsratiowilldecrease
e.totalequitywillincrease
9.NewEnglandFashionshas18,000sharesofstockoutstandingatamarketpriceof$29
ashare.Theearningspershareare$2.30.Thefirmhastotalassetsof$280,000andtotal
liabilitiesof$136,000.Today,thefirmispayinganannualcashdividendof$1.40a
share.Ignoretaxes.Afterthedividend,thefirm's:
a.priceearningsratiowillbe12.61.
b.earningspersharewillbe$.90.
c.stockpricewillbe$29.
D.bookvaluepersharewillbe$6.60.
e.shareholdervaluepersharewillbe$27.60.
10.TheequityofManorBuilderscurrentlyhasatotalbookvalueof$1.3millionanda
totalmarketvalueof$3.8million.Thecommonstockhasamarketvalueof$36ashare.
Thefirmhasnopreferredstockoutstanding.Howmuchwillthedividendpersharebeif
thefirmpaysoutatotalof$60,000incashdividends?
A.$.57
b.$.62
c.$.83
d.$.87
e.$.91
