Dividend Policy Quiz

Profits distributed to shareholders typically take the form of:

• Profits retained by the company

• Dividends

• Debt payments made by the company

Portion of net profits kept within the company for future expansion or investment is called:

• Retained earnings

• Debt reserve

• Shareholders’ payout

An optimum dividend policy strives to:

• Maximize shareholder satisfaction while retaining profits

• Provide the highest possible payout to investors

• Reduce the company’s profits

One internal factor affecting the ability to pay a dividend is:

• Market trends

• Debt obligations

• Tax policy

Inflation falls under:

• An internal factor affecting dividend policy

• An external factor affecting dividend policy

• A policy related directly to payout ratio

Stable Dividend Policy involves:

• Fixed payout percentage every year

• Fixed amount per share with occasional additional payments

• Residue after retaining profits for desirable investment

When payout is a fixed percentage of earnings, it refers to:

• Residue policy

• Constant payout ratio policy

• Stable policy

Profits first used for desirable investment and whatever is left is distributed:

• Residual policy

• Constant payout policy

• Fixed policy per share

Additional shares issued instead of cash payments are called:

• Cash payout

• Stock dividend

• Debt retirement payout

When a company splits its shares without affecting its total market capitalization, it’s called:

• Stock buyback

• Stock split

• Residue policy