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Exam 14: Payout Policy

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Question 51

Multiple Choice

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A company that seeks to pay a fixed dollar amount in dividends each period is following a

A) constant nominal payment policy
B) constant payout ratio policy
C) low-regular-and extra policy
D) earnings management policy

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Question 52

Multiple Choice

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Which of the following is true concerning publicly traded companies?

A) the number of companies that pay dividends has been declining over time
B) the aggregate payout (dividend payout) of companies has increased over time
C) the aggregate payout (dividend payout) of companies has decreased over time
D) a and b

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Question 53

Multiple Choice

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A firm's investment opportunity set is a function of a firm's:

Which of the following statements is (are) true?

Louis International has earnings per share of $2.25; just paid dividend $1.05 and expects a ROI next year (and the foreseeable future) of 16%.If the stock has a beta of 1.8,and the current risk -free and market premium is 2% and 5% respectively,what is the intrinsic value of the stock?

The date on which all the stockholders are determined that are eligible to receive a dividend is called the ...

The central predictions of the agency cost/contracting model of dividend payments include:

An increase in which of the following variables is likely to lead to an increase in a firm's dividend payout?

CashOut,Inc.has a current share price of $50.If CashOut plans to pay a $1 dividend,then if we ignore the effect of taxes we would expect the price of CashOut shares to change by what amount on the ex dividend date?

Louis International has earnings per share of $2.25; just paid dividend $1.05 and expects a ROI next year (and the foreseeable future) of 16% What is the dividend payout ratio?

Place the following dates related to dividend payments in proper order:

Which of the following are methods to distribute cash to shareholders?

Two identical companies with identical share prices (and identical numbers of shares outstanding) change their quarterly dividend by the same amount.However,Company A is increasing its dividend while Company B is decreasing its dividend.Choose the correct description of what should follow given the empirical evidence.

Emma International has earnings per share of $3.29; just paid dividend $1.25 and expects a ROI next year (and the foreseeable future) of 14% What is the retention ratio?

Smith Enterprises just paid a 10% stock dividend.If the market price of the stock was $18 per share before the stock dividend,what do you expect it to be afterwards?

If a company strictly adheres to a constant payout ratio policy,its dividend amount will

Emma International has earnings per share of $3.29; just paid dividend $1.25 and expects a ROI next year (and the foreseeable future) of 14% What is the expected next year dividend?

The board of directors of Smith Enterprises announced a dividend of $1.75 per share on August 2.The dividend will be paid out to all shareholders of record as of August 10.If you bought 100 shares of Smith Enterprises stock on August 3,how much total dividend are you going to receive?

NARRBEGIN: Exhibit 14-1 Exhibit 13-1 You currently hold 100 shares of Bavarian Sausage,Inc.stock which you purchased three months ago at $25.50 and which is currently trading at $28.The stock will pay a $3.75 dividend in a few days and the ex-dividend day is tomorrow.Your personal tax rate on dividend income is 25% and the capital gains tax is 15%. -Refer to Exhibit 14-1.If you decide to sell the stock after you received the dividend and the dividend is fully reflected in the ex-dividend price,what is the total after tax dollar return on the investment?

Dividends are irrelevant in perfect capital markets because