MGF chapter 14
accounting for the time value of money, which is true of an increase dividend payout at a point in time? (2)
1) it is exactly offset by a decrease somewhere else 2) the net effect is zero
which of the following is true about stock dividends and stock splits (2)
both will increase the total number of shares both will reduce the share price
which of the following are positives of paying dividends (2)
cash dividends can underscore good results stock price usually increase with the announcement of new or increased dividend
a firms ability to pay dividends may be restrained by
convenants in a bond indeture
flotation costs will
decrease the value of stock
what is true relative to dividends (3)
dividend stability is important investors will view a dividend cut as bad news dividend increases tend to lag earnings increases
dividends received by shareholders can be expressed in which of the following ways (3)
dividend yield dividend per share dividend payout
a stock dividend will result in which of the following (2)
increase in shares outstanding a decrease in the value per share
the crux of dividend policy is whether the firm should pay out money to its shareholders or take that money and
invest it for shareholders
relatively young firms should consider a dividend policy aimed at
retaining earnings to reinvest in the firm
a firm can pay out its cash earnings to its shareholders in which of the following ways (2)
share repurchase dividends
an alternative way to pay out a firms earnings to shareholders instead of cash dividends is a
stock repurchase
which of the following involves a firm distributing stock instead of cash to its owners (2)
stock split stock dividend
a _______ repurchase occurs when a firm repurchase shares from specific individual stockholders
targeted
a reverse stock split results in (2)
a higher share price an investor owning fewer shares
the dividend policy question addresses whether the firm should payout
a larger or smaller % of its new earnings now
which of the following are factors which favor a low dividend pay out (3)
flotation costs bond covenant restrictions tax laws
a firm which pays cash dividends is signaling ________ and ______
it expects to continue to be profitable.......its not hoarding too much cash
which of the following are forms of cash dividends? (4)
liquidating dividends regular cash dividends special dividends extra dividends
when a firm authorizes a trustee to repurchase shares as they become available they are using __________ purchase technique
open market
a frim can pay out its cash earnings to its shareholders in which of the following ways? (2)
share repurchase dividends
dividends are heavily concentrated among is relatively________ number of _______, mature firms
small....large
the concept that stocks attract certain investors due to a firms dividend policy and the resulting tax impact is called
the clientele effect
the unwillingness of many older, gains firms to cut dividends is referred to as
the legacy effect
the basic question of dividend policy is the choice of
the time pattern of dividend payout
a stock split increase the number of outstanding shares, while
the total owners equity remains constant
dividend policy can ben the described as the
time pattern of dividend pay out
a company may consider a reverse stock split for which of the following reasons (4)
to reduce transaction costs to investors to meet exchange listing requirements increase liquidity to increase the share price to a respectable level
the difference between the lowest and highest prices at which a stock has traded is called its
trading range
which of the following are reasons why investors might favor a high dividend payout? (3)
transaction costs are selling low dividend stocks can be avoided a preference for tax and legal benefits a preference for current income
which of the following might be tax-exempt investors (3)
trust funds university endowment funds pension funds
a dividend _____ is calculated as a % of stocks market price
yield
