FIN335Ch14and18Questions - Chapter 14 Questions Topic...

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Chapter 14 Questions: Topic: DIVIDENDS 1. Payments made out of a firm's earnings to its owners in the form of cash or stock are called: A) Dividends. B) Distributions. C) Share repurchases. D) Payments-in-kind. E) Stock splits. Answer: A Topic: REGULAR CASH DIVIDENDS 2. A cash payment made by a firm to its owners in the normal course of business is called a: Topic: SPECIAL DIVIDENDS 3. A cash payment made by a firm to its owners as a result of a one-time event is called a: Topic: LIQUIDATING DIVIDENDS 4. A cash payment made by a firm to its owners when some of the firm's assets are sold off is called a: Topic: DECLARATION DATE 5. The date on which the board of directors passes a resolution authorizing payment of a dividend to the shareholders is the ____________ date. A) ex-rights B) ex-dividend C) record D) payment E) declaration Answer: E Topic: EX-DIVIDEND DATE
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6. The date before which a new purchaser of stock is entitled to receive a declared dividend, but on or after which she does not receive the dividend, is called the ____________ date. Topic: DATE OF RECORD 7. The date by which a stockholder must be registered on the firm's roll as having share ownership in order to receive a declared dividend is called the _______________. Topic: DATE OF PAYMENT 8. The date on which the firm mails out its declared dividends is called the _______________. Topic: HOMEMADE DIVIDENDS 9. The ability of shareholders to undo the dividend policy of the firm and create an alternative dividend payment policy via reinvesting dividends or selling shares of stock is called (a): A) Perfect foresight model. B) M&M Proposition I. C) Capital structure irrelevancy. D) Homemade leverage. E) Homemade dividend policy. Answer: E Topic: CLIENTELE EFFECT 10. The observed empirical fact that stocks attract particular investors based on the firm's dividend policy and the resulting tax impact on investors is called the _______________.
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