Chapter 16 MC - CHAPTER SIXTEEN Multiple Choice Questions...

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CHAPTER SIXTEEN Multiple Choice Questions 16-1. All but which of the following would affect dividend policy? a. a firm’s need for funds b. prospectus restrictions c. stockholders’ expectations d. contractual restrictions 16-2. Your stockholders are primarily “yuppie” investors working towards profitable retirement and they are in high tax brackets. Which of the following dividend policies might cause your stockholders to sell their taxable stock holdings? a. income tax rate on regular income is decreased b. your dividend payout ratio is increased c. capital gains tax is lowered d. your dividend payout ratio is decreased 16-3. Raiding the initial capital refers to: a. high dividend payout ratio b. high net working capital levels c. ignoring a restrictive covenant regarding retained earnings d. a change in retained earnings that causes retained earnings on the balance sheet to go negative 16-4. Net income is $55,000, dividends paid are $8,000; what is the dividend payout ratio? a. 0.0688% b. 0.145% c. 14.55% d. 6.88% 16-5. Stable dividends would normally cause the stock price to: a. increase b. decrease c. stabilize at a flat price d. destabilize 191
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16-6. Dividends are paid with: a. capital b. cash c. capital surplus d. current assets 16-7. Dividends on common stock are: a. declared by a majority voting rule b. decided by the board of directors c. declared by the CEO d. declared using the cumulative voting rule 16-8. The declaration date is the: a. date of record b. cutoff date c. date the forthcoming dividend is announced d. date of trading ex-dividend 16-9. Date of record is: a. the date stockholder records are checked to determine who will receive the forthcoming dividend b. the date ex-dividend trading begins c. also referred to as the declaration date d. set by the CEO 16-10. The date of record is Wednesday, June 10. The ex-dividend trading would begin on: a. Friday, June 5 b. Friday, June 12 c. Monday, June 8 d. Monday, June 22 16-11. If the firm pays out dividends from whatever remains after capital budgeting financing requirements are satisfied, the firm is said to have a: a. signaling dividend policy b. continuous growth dividend policy c. residual dividend policy d. clientele dividend policy 192
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16-12. If the firm elects to reinvest all earnings into the firm and sticks to this policy, it can best be described as: a. signaling dividend policy
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This note was uploaded on 01/21/2011 for the course ACC 452 taught by Professor Mr.cula during the Spring '10 term at Abraham Baldwin Agricultural College.

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Chapter 16 MC - CHAPTER SIXTEEN Multiple Choice Questions...

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