20. Those who believe investors choose a particular stock due to the firm's dividend policy would contend that firm should consider the ____ effect when changing dividend policies. A.clienteleB. taxC. free cash flowD. IRSE. relevance21. The residual dividend policy implies that investors prefer to have the firm retain and reinvest earnings rather than pay them out in dividends if the rate of return the firm can earn on reinvested earnings
22. The ex dividend date is ____ prior to the holder-of-record date. 23. The date on which a firm's board of directors issues a statement declaring a dividend is the ____. 24. Why is the ex-dividend date important to someone who is considering purchasing a firm's stock? A.If the stock is purchased on this date or later the buyer will not receive the next dividend paid by the firm.B. This is the date the firm "opens its books" to determine the names of the persons who will receive the next dividend that will be paid.C. This is the date the board of directors announces the value of the next dividend payment, so the market price of the stock will increase at this point.D. This is the date the dividend is paid¾that is, dividend checks are mailed to investors.E. The ex-dividend date really isn't very important to potential investors; this date is more important to accountants who construct financial statements because it is the date the dividend becomes a legal liability of the firm.25. If you are considering purchasing a stock because you want to receive the nextdividend that will be paid by the firm, which of the following dates would be most important to the timing of your purchase? 26. According to your text, the ex-dividend date associated with a stock is two days before the
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- Dividends, Dividend Policy, Dividend, Dividend yield