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WorksheetsCorporate Finance 4
Total questions: 10
Worksheet time: 5mins
Which of the following dividends is never in the form of cash?
Regular dividend
Special dividend
Stock dividend
Liquidation dividend
. Dividends are decided by
The managers of a firm
The employees of a firm
The board of directors
The government
Announcement date
Payment date
Record date
Ex-dividend date
One possible reason that shareholders often insist on higher dividends is
They agree with Miller and Modigliani
They do not trust managers to spend retained earnings wisely
The stock market is efficient
Tax considerations
Find the share price of a company with a dividend stream of $5, cost of capital 10%, and growth rate 8%:
$275
$300
$200
$250
What would you expect to happen to the price of a share of stock on the day it goes ex-dividend? The price should:
increase by the amount of the dividend
decrease by the amount of the dividend
decrease by one-half the amount of the dividend
remain constant
ABC Corp. stock is selling for $30 per share when a 10% stock dividend is declared. If you own 100 shares of ABC Corp. then you will receive:
$3
$300
$300 plus 10 shares of ABC Corp
10 shares of ABC Corp
A policy of dividend "smoothing" refers to:
maintaining a constant dividend payout ratio
keeping the regular dividend at the same level indefinitely
maintaining a steady progression of dividend increases over time
alternating cash dividends with stock dividends
Which of the following signals is most likely to elicit a decrease in share price for slow growth utility company that currently pays a small dividend?
A repurchase of 5% of the firm's stock
An unexpected increase in the regular quarterly dividend
An unexpected decrease in the regular quarterly dividend
Borrowing funds in order to pay a cash dividend
After the payment of a 25% stock dividend, an investor has 500 shares of stock and $400 total value. What did the investor have prior to the stock dividend?
375 shares of stock and $375 total value
400 shares of stock and $400 total value
400 shares of stock and $500 total value
625 shares of stock and $400 total value
