fin 2
A company wants to implement a capital growth policy. In the current year it had $10 million in net income. How much income should it distribute in dividends?
$1 million
A company made $10 million in revenue. It is interested in pursuing a new project that costs $2 million, but will make them $7 million in the long run. How much should the company pay in dividends under the Residual Dividend Model?
$8 million
Which of the following is a reason a company might have for initiating a reverse stock split?
All of these answers.
Which of the following statements is true about companies that pay a high dividend?
All of these answers.
Which of the following changes after a stock splits?
The stock's per share price.
The following journal entry would account for which of the following transactions? Dr. Retained earnings Cr. Common stock Cr. Paid-in capital
stock dividends
Under the Modigliani-Miller theorem in finance, the value of a company depends on:
the competitive situation of the company and the projects that the company undertakes and plans.
The Modigliani-Miller theory suggests that it doesn't matter to a shareholder whether a company issues dividends. Why might that theory not be applicable to the US stock market as it currently exists?
All of these answers.
Which of the following influences how a dividend is reported on a company's books?
All of these answers.
Which of the following is a benefit of a company paying a smaller dividend?
All of these answers.
Which of the following statements regarding what dividends can mean to prospective investors is true?
Dividends provide consistent returns on relatively low risk investments.
Which of the following repurchasing method definitions is NOT correct?
Repurchase Put Rights: The firm announces that it will repurchase a number of shares at a set price.
Which of the following is a benefit shareholders can obtain by repurchasing its shares?
Shareholders have a higher percent ownership in the company at a higher per share price.
Which of the following is an accurate description of one of the dates related to issuing dividends.
The declaration date is the day the board of directors announces it will pay a dividend.
Which of the following is NOT something that can be assumed about a stock based on a dividend announcement?
When a company's dividends steadily grown, this confirms the financial strength of the company.
