Which one of the following is not a reason why firms choose repurchases rather than dividends?
A. increase the value of existing stock options
B. provide shareholders with a tax advantage
C. offset dilution
D. conserve cash
CF2.4.practice2
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12 questions
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1.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
Which one of the following is not a reason why firms choose repurchases rather than dividends?
A. increase the value of existing stock options
B. provide shareholders with a tax advantage
C. offset dilution
D. conserve cash
A
B
C
D
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A change in dividend policy does not affect the value of a share of stock as long as:
A. the dividend payout ratio remains constant.
B. the following dividends are changed by the same amount.
C. all of the distributable cash flow is paid out.
D. there is an offsetting change in stock repurchases.
A
B
C
D
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
The behavioral finance concept of self-control is an argument in favor of:
A. frequent stock splits.
B. low cash dividends.
C. stock dividends.
D. high cash dividend
A
B
C
D
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
According to the clientele effect, firms can only boost their stock price:
A. by increasing their regular cash dividends.
B. by setting their dividend to the level expected by the highest-dividend-receiving satisfied clientele group.
C. by commencing dividend payments if they are a non-dividend-paying firm.
D. if an unsatisfied clientele group exists.
A
B
C
D
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Financial executives place the greatest importance on which one of these factors when setting dividend policy?
A. setting a high-dividend payout ratio even when earnings are unstable
B. maintaining a consistent dividend policy
C. increasing dividends even if they need to be lowered in the near future
D. reducing dividends anytime future earnings are in doubt
A
B
C
D
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Assume you own 300 shares of ABC stock and receive a stock dividend of 5 percent. As a result, the number of shares you own will change to _____ shares while your total wealth will increase by ___ percent.
A. 305; 5
B. 315; 0
C. 305; 0
D. 315; 5
A
B
C
D
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Alpha Co. is paying a $.72 per share dividend today. There are 138,000 shares outstanding with a par value of $1 per share. As a result of this dividend, the:
A. retained earnings will decrease by $99,360.
B. retained earnings will decrease by $138,000.
C. common stock account will decrease by $138,000.
D. common stock account will decrease by $99,360.
A
B
C
D
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