ch17 - CHAPTER 14 DISTRIBUTIONS TO SHAREHOLDERS: DIVIDENDS...

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Chapter 17 Payout Policy 17.1 Distributions to Shareholders 1) The date on which the board authorizes the dividend is the A) declaration date. B) distribution date. C) record date. D) ex - dividend date. Answer: A Diff: 1 Skill: Definition 2) The firm will pay the dividend to all shareholders who are registered owners on a specific date, set by the board, called the A) declaration date. B) record date. C) distribution date. D) ex - dividend date. Answer: B Diff: 1 Skill: Definition 3) Anyone who purchases the stock on or after the ________ date will not receive the dividend. A) distribution B) record C) ex - dividend D) declaration Answer: C Diff: 1 Skill: Definition 4) The firm mails dividend checks to the registered shareholders on the A) ex - dividend date. B) declaration date. C) distribution date. D) record date. Answer: C Diff: 1 Skill: Definition
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466 Berk/DeMarzo · Corporate Finance 5) Which of the following statements is false? A) From an accounting perspective, dividends generally reduce the firm’s current (or accumulated) retained earnings. B) The way a firm chooses between paying dividends and retaining earnings is referred to as its payout policy. C) Most companies that pay dividends pay them semi - annually. D) Occasionally, a firm may pay a one - time, special dividend that is usually much larger than a regular dividend. Answer: C Diff: 2 Skill: Conceptual 6) A firm can repurchase shares through a(n) ________ in which it offers to buy shares at a prespecified price during a short time period–generally within 20 days. A) tender offer B) open market share repurchases C) targeted repurchase D) Dutch auction share repurchase Answer: A Diff: 2 Skill: Definition 7) Another to method to repurchase shares is the ________, in which the firm lists different prices at which it is prepared to buy shares, and shareholders in turn indicate how many shares they are willing to sell at each price. A) tender offer B) Dutch auction share repurchase C) targeted repurchase D) open market share repurchases Answer: B Diff: 2 Skill: Definition
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Chapter 17 Payout Policy 467 8) A(n) ________ may occur if a major shareholder desires to sell a large number of shares but the market for the shares is not sufficiently liquid to sustain such a large sale without severely affecting the price. A) open market share repurchases B) Dutch auction share repurchase C) tender offer D) targeted repurchase Answer: D Diff: 2 Skill: Definition 9) A(n) ________ is the most common way that firms repurchase shares. A) targeted repurchase B) Dutch auction share repurchase C) tender offer D) open market share repurchases Answer: D Diff: 2 Skill: Definition 17.2 Comparison of Dividends and Share Repurchases 1) Which of the following statements is false? A) In perfect capital markets, holding fixed the investment policy of a firm, the firm’s choice of
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This note was uploaded on 02/02/2012 for the course BUS 438 taught by Professor Dutt during the Winter '12 term at Cal Poly.

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ch17 - CHAPTER 14 DISTRIBUTIONS TO SHAREHOLDERS: DIVIDENDS...

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