Brealey. Myers. Allen Chapter 16 Test

Brealey. Myers. Allen Chapter 16 Test - Chapter 16 Payout...

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Test Bank, Chapter 16 168 Chapter 16 Payout Policy Multiple Choice Questions 1. Firms can pay out cash to their shareholders in the following ways: (I) Dividends (II) Share repurchases (III) Interest payments A) I only B) II only C) III only D) I and II only Answer: D Type: Easy Page: 415 2. Dividends are decided by: (I) The managers of a firm (II) The government (III) The board of directors A) I only B) II only C) III only D) I and II only Answer: C Type: Easy Page: 416 3. Which of the following dividends is never in the form of cash? (I) Regular dividend (II) Special dividend (III) Stock dividend (IV) Liquidating dividend A) I only B) II only C) III only D) I, II, and IV only Answer: C Type: Easy Page: 417
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Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 169 4. Firms can repurchase shares in the following ways: (I) Open market repurchase (II) Through a tender offer (III) Through a Dutch auction process (IV) Through direct negotiation with a major shareholder A) I only B) II only C) III only D) I, II, III, and IV Answer: D Type: Medium Page: 417 5. The par value of the outstanding shares is defined as: A) Retained earnings B) Legal capital C) Book value of equity D) None of the above Answer: B Type: Medium Page: 417 6. Which of these dates occurs last in time (when arranged in the chronological order)? A) Payment date B) Ex-dividend date C) Record date D) Dividend declaration date Answer: A Type: Easy Page: 417 7. Which of the following lists events in the chronological order from earliest to latest? A) Record date, declaration date, ex-dividend date B) Declaration date, record date, ex-dividend date C) Declaration date, ex-dividend date, record date D) None of the above Answer: C Type: Medium Page: 417 8. The procedure where the firm states a series of prices at which it is prepared to repurchase stock. Shareholders submit offers indicting how many shares they wish to sell at each price. The firm then calculates the lowest price at which it is able to buy the desired number of shares. This procedure is known as: A) Open market transaction B) Dutch auction C) Green mail D) None of the above Answer: C Type: Medium Page: 417
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Test Bank, Chapter 16 170 9. The most important difference between stock repurchases and cash dividends is that they (I) Benefit different groups (II) Have different effects on corporate cash flow (III) May have different tax consequences A) I only B) II only C) III only D) I, II, and III Answer: B Type: Difficult Page: 417 10. Greenmail refers to the practice of a company purchasing its stock from: A) Small shareholders who are unhappy with performance of the firm B) A hostile shareholder who threatens to take over the firm C) Large shareholders who are unhappy with performance of the firm D) None of the above Answer: B Type: Medium Page: 417 11. Which of the following is not true? A)
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This note was uploaded on 04/18/2010 for the course FINANCE 936116531 taught by Professor Wuyiling during the Spring '10 term at Nashville State Community College.

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Brealey. Myers. Allen Chapter 16 Test - Chapter 16 Payout...

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