FIN534 Final Exam Part 2 - Question 1 2 out of 2 points Which of the following is NOT normally regarded as being a good reason to establish an ESOP

FIN534 Final Exam Part 2 - Question 1 2 out of 2 points...

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Question 1 2 out of 2 points Which of the following is NOT normally regarded as being a good reason to establish an ESOP? Answer Selected Answer: To make it easier to grant stock options to employees. Correct Answer: To make it easier to grant stock options to employees. Question 2 2 out of 2 points Which of the following is NOT normally regarded as being a barrier to hostile takeovers? Answer Selected Answer: Abnormally high executive compensation. Correct Answer: Abnormally high executive compensation. Question 3 2 out of 2 points If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that Answer Selected Answer: no dividends were paid during the year. Correct Answer: no dividends were paid during the year. Question 4 0 out of 2 points
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Which of the following statements is correct? Answer Selected Answer: One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding. Correct Answer: Stock repurchases can be used by a firm that wants to increase its debt ratio. Question 5 2 out of 2 points Which of the following statements is NOT correct? Answer Selected Answer: Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan. Correct Answer: Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan. Question 6 2 out of 2 points Which of the following actions will best enable a company to raise additional equity capital? Answer Selected Answer: Begin a new-stock dividend reinvestment plan. Correct Answer: Begin a new-stock dividend reinvestment plan. Question 7 2 out of 2 points Which of the following statements is correct? Answer
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Selected Answer: If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes. Correct Answer: If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes. Question 8 2 out of 2 points Which of the following statements is CORRECT? Answer Selecte d Answer: If a firm's stock price is quite high relative to most stockssay $500 per share then it can declare a stock split of say 10- for-1 so as to bring the price down to something close to $50. Moreover, if the price is relatively low say $2 per share then it can declare a "reverse split" of say 1-for-25 so as to bring the price up to somewhere around $50 per share.
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  • Spring '14
  • Options, Foreign exchange market, United States dollar

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