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| 1 | |
A common stock dividend that results in a distribution of capital is called a(an) _____ dividend. |
| | A) | cum |
| | B) | extra cash |
| | C) | special |
| | D) | liquidating |
| | E) | stock distribution |
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| 2 | |
A _____ is a cash payment made to shareholders from sources other than current or accumulated retained earnings. |
| | A) | distribution |
| | B) | stock dividend |
| | C) | extra dividend |
| | D) | special dividend |
| | E) | regular cash dividend |
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| 3 | |
A stock dividend _____ the number of shares outstanding and a stock split _____ the number of shares outstanding. |
| | A) | increases; increases |
| | B) | increases; decreases |
| | C) | decreases; increases |
| | D) | does not change; increases |
| | E) | does not change; decreases |
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| 4 | |
When a cash payment is made to shareholders, as it has been at the end of each quarter for the past five years, it is called a _____ dividend. |
| | A) | homemade |
| | B) | special |
| | C) | residual |
| | D) | regular |
| | E) | liquidating |
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| 5 | |
You purchase 300 shares of DKA stock for $23.50 per share just before the market closes on Tuesday, October 12. The ex-dividend date is October 13. The quarterly dividend is $0.90 per share. Ignore taxes. Just after the market opens on the morning of October 13, your total wealth, all else equal, will be: |
| | A) | $6,660. |
| | B) | $6,780. |
| | C) | $6,970. |
| | D) | $7,050. |
| | E) | $7,320. |
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| 6 | |
When a shareholder acts on his or her own to alter a corporation's dividend policy by means of buying and selling shares of stock they are creating a _____ dividend. |
| | A) | special |
| | B) | regular |
| | C) | residual |
| | D) | homemade |
| | E) | liquidating |
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| 7 | |
Consider an all-equity firm. There are 40,000 shares of stock outstanding at a market price of $26.97 per share. Total earnings for the most recent year are $42,000. The firm has cash of $18,000 in excess of what is necessary to fund its positive net present value projects. The firm's other assets have a market value of $589,000. There are no transaction costs, taxes, or other market imperfections. Assume the firm pays the $18,000 excess cash out in the form of a cash dividend. What will the market price per share be after the dividend, all else constant? |
| | A) | $26.32 |
| | B) | $26.52 |
| | C) | $26.77 |
| | D) | $26.97 |
| | E) | $27.20 |
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| 8 | |
Which one of the following statements is correct? |
| | A) | Dividends are declared by the CEO of a firm. |
| | B) | A dividend is first considered as a liability of a firm on the payment date. |
| | C) | Based on NYSE rules, shares are sold ex-dividend on and after the third business day before the date of record. |
| | D) | Dividends are distributed to shareholders on the date of record. |
| | E) | To receive a dividend, you must purchase a stock prior to the ex-dividend date so that you are recorded as the owner on the record date. |
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| 9 | |
Henley Auto Parts announced the payment of an $0.85 per share with a record date of Wednesday, November 15. In order to receive the dividend, you must purchase the stock no later than: |
| | A) | Wednesday, November 15. |
| | B) | Tuesday, November 14. |
| | C) | Monday, November 13. |
| | D) | Friday, November 10. |
| | E) | Thursday, November 9. |
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| 10 | |
On March 3, the board of directors of Iomega declared a dividend of $0.65 per share payable on Monday, March 25 to shareholders of record as of Monday, March 11. Under NYSE rules, if you bought 200 shares of Iomega stock on Wednesday, March 6 for $36.80 per share, how much would you receive in dividends on March 25? |
| | A) | $0 |
| | B) | $32.50 |
| | C) | $37.50 |
| | D) | $130.00 |
| | E) | $150.00 |
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