DSM 13

The optimal dividend payout policy in the presence of taxes when capital gains are taxes at a lower rate than dividends is for the firm to pay______

0 dividends

According to ________ theory, investors have a fluctuating demand for dividends over time that often differs based on economic or market conditions:

Catering

Which of the following is a commonly used dividend policy?

Constant payout ratio

Which of the following is a good reason for a firm to repurchase stock?

Enhancing shareholder value

Share repurchases can be considered a form of______

Financing policy

Investors can prefer different types of dividend policies due to differences in_______

Income levels

The residual theory of dividends suggests that dividends are ______ to the value of the firm

Irrelevant

A company might initiate a stock split to:

Keep the share price in an optimal trading range

The purpose of a stock split is to:

Lower the market price of the stock

The dividend signaling hypothesis would interpret a cut in dividends as a:

Negative signal

_______ policy is when the firm pays out a fixed dollar dividend each period

Regular dividend

Regular dividends ______

Send a stronger signal of financial strength than infrequent distributions

A ______ lowers the market price of a firm's stock by increasing the number of shares outstanding

Stock split

During the 2007 - 2009 recession dividends:

fell less than earnings

The most common way for a firm to repurchase shares:

An open market repurchase

According to the bird-in-the-hand theory of dividend relevance, investors believe current dividends:

Are less risky than future cash distributions

Dividend reinvestment plans, or DRIPs, often allow stockholders use dividend proceeds to buy additional share of the firm's stock:

At prices below the current market price

The payment of cash dividends to corporate stockholders is decided by the______

Board of directors

When common stock is repurchased and retired, the underlying motive is to:

Distribute excess cash to the owners

Modigliani and Miller argue that when the firm has no acceptable investment opportunities it should:

Distribute the unneeded funds to the owners

In general, firms with rapid growth:

Do not distribute cash to shareholders

A stock repurchase method where the firm specifies the number of shares it is willing to buy back at various prices and then allows investors to indicate how many shares they will sell at each price is the process used in a :

Dutch Auction Repurchase