Dividends

What form of investment income is the result of a company distributing some/all of its profits to shareholders?

• Capital Gain

• Dividend

• Interest

• Premium

What type of company is more likely to pay a dividend?

• Growth-oriented

• Start-up

• Mature

• Unprofitable

If a company has a stated dividend policy, the payment of the dividend is a legal obligation.

• True

• False

In order to pay a dividend, a company must be profitable or have reserves accumulated from prior periods.

• True

• False

Which of the following is FALSE regarding Dividend Reinvestment Plans?

• May be arranged with broker or through issuing company

• Shares can be offered at a discount

• Shares are acquired without a commission

• Fractional share purchases are not permitted

The date when the Board of Directors announces the dividend.

• Payment Date

• Date of Record

• Declaration Date

• Ex-Dividend Date

If you buy a stock before the date of record, you will receive the dividend.

• True

• False

If you purchase the shares on May 28, do you receive the dividend?

• Yes

• No

If you purchase the shares on May 27, do you receive the dividend?

• Yes

• No

A very high dividend yield (%) may indicate which of the following?

• The stock is undervalued

• The stock is overvalued

• Investors are anticipating a dividend cut

• Future profits are expected to accelerate