FIN335Ch14and18Questions

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: A) Share repurchase. B) Liquidating dividend. C) Regular cash dividend. D) Special dividend. E) Extra cash dividend. Answer: C 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: A) Share repurchase. B) Liquidating dividend. C) Regular cash dividend. D) Special dividend. E) Extra cash dividend. Answer: D 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: A) Liquidating dividend. B) Regular cash dividend. C) Special dividend. D) Extra cash dividend. Answer: 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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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. A) ex-rights B) ex-dividend C) record D) payment E) declaration Answer: B 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 _______________. A) date of ex-rights B) date of ex-dividend C) date of record D) date of payment E) date of declaration Answer: C Topic: DATE OF PAYMENT 8. The date on which the firm mails out its declared dividends is called the _______________. A) date of ex-rights B) date of ex-dividend C) date of record D) date of payment E) date of declaration Answer: D 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 _______________. A) information content effect B) clientele effect C) Efficient Markets Hypothesis D) M&M Proposition I E) M&M Proposition II Answer: B Topic: RESIDUAL DIVIDEND APPROACH 11. A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debt/equity ratio, is called a _______________. A)
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This note was uploaded on 12/08/2010 for the course FINANCE 3320 taught by Professor Wigmans,f during the Spring '08 term at Texas Tech.

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FIN335Ch14and18Questions - Chapter 14 Questions: Topic:...

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