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