Chapter 17 -2 Test Bank

Chapter 17 -2 Test Bank - CHAPTER 14 Dividends and Dividend...

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Unformatted text preview: CHAPTER 14 Dividends and Dividend Policy I. DEFINITIONS 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: DISTRIBUTIONS 2. Payments made by a firm to its owners from sources other than current or accumulated earnings are called: A) Dividends. B) Distributions. C) Share repurchases. D) Payments-in-kind. E) Stock splits. Answer: B Topic: REGULAR CASH DIVIDENDS 3. 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 4. 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 5. 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 6. 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 7. 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 8. 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 9. 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 10. 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: INFORMATION CONTENT EFFECT 11. The market's reaction to the announcement of a change in the firm's dividend payout is the: A) Information content effect....
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This note was uploaded on 05/10/2011 for the course FIN 3716 taught by Professor Fang during the Spring '10 term at LSU.

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Chapter 17 -2 Test Bank - CHAPTER 14 Dividends and Dividend...

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