Guys, does anyone know the answer?
get the repurchase of stock is considered ______ decision rather than ______ decision. from screen.
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Week 6 - Dividend Policy
105cards Harrison L. Finance
Principles Of Finance
Page 480 - 501
The combination of positive news (dividend _________) and negative information (caution about future) often leaves investors _______ of the sustainability of dividend increases
A dividend _________ provides positive news for investors
The term ________ refers to a cash distribution of earnings
Any direct payment by the corporation to shareholders may be considered part of ___________ policy
dividend Define dividend
The redistribution of earnings from firm to shareholders (part of the price of share is offered as cash)
A dividend is associated with the redistribution of earnings from ______ to ___________
What are the 4 types of dividend?
Regular cash dividend
Special dividend (extra dividend)
The most common type of dividend is in the form of ______; known as ________ ____ _________
cash regular cash dividend
What is a regular cash dividend?
A payment of cash by the firm to its shareholders
What is the most common dividend type?
regular cash dividend
How often are regular cash dividends paid out?
Usually 2 times per year
Paying a cash dividend reduces ... and ... (except in the case of a _________ dividend)
corporate cash retained earnings liquidating
What is a special dividend also known as?
What is meant by a special dividend/extra dividend?
A dividend that is unlikely to be repeated
What is meant by a liquidating dividend?
A dividend that represents a return of capital (happens during liquidation)
What type of dividend is paid out in shares of equity?
A stock dividend
Instead of providing cash to shareholders, extra stocks (more voting rights) can be provided via a _________ dividend
Define stock dividend
Instead of providing cash to shareholders, provide them with extra stocks (more voting rights)
Why is a stock dividend not a dividend?
Because no cash leaves the firm
A stock dividend increases the number of ...
shares outstanding, thereby
T/F: when a stock dividend is issued, the value of each shares increases
False. When a stock dividend is issued, the number of shares outstanding increases, thereby reducing the value of each share
A stock dividend is commonly expressed as a ratio. For example, a shareholder received 1 new share for every 50 currently owned, resulting in a __% stock dividend
A share buy-back is also known as...
a share repurchase
Instead of paying dividends, how else may a firm transfer cash to stockholders?
A share buy-back scheme
What is meant by a share buy-back/repurchase?
A firm distributes cash to shareholders by repurchasing shares from shareholders
Instead of paying dividends, a firm may use cash to repurchase shares of its own equity. This is known as...
a share repurchase/buy-back
What are the 4 types of share buy-back/repurchase?
Open market repurchases
Fixed-price tender offers
What is meant by an open market repurchase?
A type of share buyback whereby the firm decides to buy back shares at market prices. The firm simply purchases their own equity, just as anyone would. They do not reveal themselves as the buyer
Which type of share buy-back?Open market repurchase:Companies simply purchase their own equity, and the firm does not reveal itself as the buyer
What is meant by a (fixed-price) tender offer?
The firm buys a fixed number of shares at a specific price - which is set higher than the current (market) share price
In a (fixed-price) tender offer, the price is set above the current market share price. Why?
To encourage shareholders to sell (tender) their shares
What is meant by a Dutch Auction?
A type of share buyback where firms provide a price range, and shareholders bid within the range. The most appealing offer is accepted as repurchase price (lowest)
What is meant by a private negotiation?
A type of share buyback where a firm discusses buyback of shares in a private negotiation. Usually used to avoid takeover by a large shareholder
Why is a private negotiation often used in share buyback schemes?
To negotiate with large shareholders in order to prevent takeover
T/F: firms tend to have a preference of share buybacks/repurchases rather than dividends
True, buybacks are increasingly popular over dividends
The decision to pay a dividend rests in the hands of...
the board of directors of the corporation
A dividend is distributable to shareholders of record on...
a specific date
When a dividend has been declared, it becomes a _________ of the firm and cannot be easily rescinded by the corporation
The amount of dividend is expressed as ...
or % of market price (dividend yield) or percentage of earnings per share (dividend payout)
Dividend payments are made to stockholders holding shares on a particular ________ date
(PDF) Multiple Choice Questions and Answers:Capital Structure & Dividend Policy
PDF | 1. A single, overall cost of capital is often used to evaluate projects because: a. It avoids the problem of computing the required rate of return... | Find, read and cite all the research you need on ResearchGate
HomeCorporate FinanceEconFinancial EconomicsCapital Structure
Multiple Choice Questions and Answers:Capital Structure & Dividend Policy
Edition: 1stPublisher: A.AjanthanEditor: A.AjanthanISBN: 978-955-41040-1-3
University of Jaffna
1. A single, overall cost of capital is often used to evaluate projects because: a. It avoids the problem of computing the required rate of return for each investment proposal. b. It is the only way to measure a firm's required return. c. It acknowledges that most new investment projects have about the same degree of risk. d. It acknowledges that most new investment projects offer about the same expected return. 2. The weighted average cost of capital for a firm is the: a. Discount rate which the firm should apply to all of the projects it undertakes. b. Rate of return a firm must earn on its existing assets to maintain the current value of its stock. c. Coupon rate the firm should expect to pay on its next bond issue. d. Maximum rate which the firm should require on any projects it undertakes. e. Required rate which every project's internal rate of return must exceed. 3. Peter's Audio Shop has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%. What is the weighted average cost of capital for Peter's Audio Shop? a. 6.14% b. 6.54% c. 8.60% d. 9.14% e. 9.45%Discover the world's research
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