FIN3320 exam for fi 516

FIN3320 exam for fi 516 - F IN3320 ExamFour;Chapters1417 1...

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FIN3320 Exam Four; Chapters 14-17 1. Nistelroy Communications recently completed a 3-for-1 stock split. Prior to the split, its stock price was $120 per share. The firm's total market value increased by 5% as a result of the split. What was the price of the stock following the stock split? a. $33.00 b. $40.00 C. $42.00 d. $46.00 e. $50.00 (120 * 1.05)/ 3 = 42.00 2. Ronaldo Inc. has a capital budget of $1,000,000, but it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts this year's net income to be $600,000. If the company follows a residual dividend policy, what will be its dividend payout ratio? a. 16.67% b. 20.00% c. 25.00% D. 33.33% e. 35.00% $1,000,000 * 40% = 400,000 must be retained (600,000 - 400,000)= 200,000/600,000 = 33.33% paid out 3. You currently own 100 shares of Troll Brothers stock, which currently sells for $120 a share. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place? a. You will have 200 shares of stock, and the stock will trade at or near $120 a share. B. You will have 200 shares of stock, and the stock will trade at or near $60 a share. c. You will have 100 shares of stock, and the stock will trade at or near $60 a share. d. You will have 50 shares of stock, and the stock will trade at or near $120 a share. e. You will have 50 shares of stock, and the stock will trade at or near $60 a share. 4. Which of the following would be most likely to lead to a decrease in a firm's willingness to pay dividends?
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a. Its earnings become less stable. b. Its access to the capital markets increases. C. d. Its accounts receivable decreases due to a change in its credit policy. e. Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages. 5. Which of the following SHOULD NOT influence a firm's dividend policy decision? a. The firm's ability to accelerate or delay investment projects. b. A strong preference by most shareholders in the economy for current cash income versus capital gains. c. Constraints imposed by the firm's bond indenture. D.
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FIN3320 exam for fi 516 - F IN3320 ExamFour;Chapters1417 1...

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