公司理财精要第十四章题库

Chapter14

DividendsandDividendPolicy

MultipleChoiceQuestions

1.Whichoneofthefollowingisapaymentofeithercashorsharesofstockthatispaidoutof

earningstoafirm'sshareholders?

A.Interest

B.Distribution

C.Retainedearnings

D.Dividend

E.Stockrepurchase

2.Whichoneofthefollowingisapaymentbyafirmtoitsshareholdersfromanysourceother

thancurrentoraccumulatedretainedearnings?

A.Interest

B.Distribution

C.Retainedearnings

D.Dividend

E.Stockrepurchase

3.Whichoneofthefollowingbestdefinesaregularcashdividend?

A.Distributionbyafirmtoitsshareholders

B.Paymentfromanysourcebyafirmtoitsowners

C.One-timepaymentofcashbyafirmtoitsshareholders

D.Cashpaymentbyafirmtoitsownersaspartofafirm'snormaloperations

E.Distributionoftheproceedsfromthesaleofaportionofafirm'soperations

4.Whichoneofthefollowingisthedateonwhichtheboardofdirectorsagreestopaya

dividendandpassesaresolutiontodoso?

A.Dateofrecord

B.Ex-dividenddate

C.Paymentdate

D.Declarationdate

E.Publicannouncementdate

5.Theex-dividenddateisdefinedasday(s)beforethedateofrecord.

A.threebusiness

B.three

C.twobusiness

D.two

E.one

6.Onwhichoneofthefollowingdatesisthedeterminationmadeastowhichshareholderswill

receiveadividendpayment?

A.Dateofrecord

B.Ex-dividenddate

C.Paymentdate

D.Declarationdate

E.Publicannouncementdate

7.Onwhichoneofthefollowingdatesaredividendchecksmailed?

A.Dateofrecord

B.Ex-dividenddate

C.Paymentdate

D.Declarationdate

E.Publicannouncementdate

8.Theclienteleeffectstatesthatinvestorsfallintovariousgroupsbecauseofdifferencesin

theirpreferencesforwhichoneofthefollowing?

A.Sharepricelevels

B.Risklevel

C.Short-termversuslong-terminvestments

D.Ratesofreturn

E.Dividends

9.Thismorning,LambertMaterialsbought10,000ofitsoutstandingsharesintheopenmarket.

Whattypeoftransactionwasthis?

A.Stockpayout

B.Stockdistribution

C.Stockdividend

D.Stockrepurchase

E.Stockreversal

10.Whichoneofthefollowingisanon-cashpaymentmadebyafirmtoitsshareholdersandis

apaymentthatlessensthevalueofeachoutstandingshare?

A.Reversestocksplit

B.Cashdistribution

C.Stockdividend

D.Regulardividend

E.Liquidatingdividend

11.Whichoneofthefollowingincreasesthenumberofsharesoutstandingbutdoesnot

increasethevalueofowner'sequity?

A.Stockrepurchase

B.Reversestocksplit

C.Stocksplit

D.Cashdistribution

E.Liquidatingdividend

12.Duringthepastyear,ABCstockhassoldforaslittleas$19ashareandamuchas$33a

share.Whichoneofthefollowingtermsappliestotheseprices?

A.Benchmarkvalues

B.Pricesplits

C.Pricedividers

D.Splitrange

E.Tradingrange

13.Whichoneofthefollowingreducesthenumberofsharesoutstandingbutdoesnotchangea

firm'stotalequity?

A.Stocksplit

B.Distribution

C.Reversesplit

D.Liquidation

E.Redemption

14.Lester'sDryGoodspaid$1.10pershareindividendslastyear.Thecompanycurrentlyhas

excesscashandwouldliketodistribute$0.40asharetoitsshareholders.However,the

companyisconcernedaboutincreasingthedividendbythatamountasitwillnotbeableto

affordanyincreaseinthefutureanddoesn'twanttolowerthedividendonceithasbeenraised.

Whichoneofthefollowingisprobablythebestsuggestionfordistributingthe$0.40pershare?

A.Specialdividendof$0.40pershare

B.Extracashdividendof$0.40pershare

C.Liquidatingdividendof$0.40pershare

D.Increasetheregulardividendby$0.11andpayaspecialdividendof$0.29

E.Increasetheregulardividendby$0.11andpayanextracashdividendof$0.29

15.DowntownMerchantshaspaidaquarterlydividendof$0.60pershareforthepasttwo

years.Thisquarter,thefirmplanstopay$0.60plusanadditional$0.05.Thefirmhasstatedthat

ituncertainwhetheritwillpay$0.60or$0.65persharenextquarter.Whichoneofthe

followingisthebestdescriptionoftheadditional$0.05thatisbeingpaidthisquarter?

A.Liquidatingdividend

B.Specialdividend

C.Extradividend

D.Stockdividend

E.Normaldividend

16.Whichoneofthefollowingisanexampleofaliquidatingdividend?

A.ValleyFeedMillsrecentlysolditsgrainstoragefacilityandisdistributingtheproceedsof

thatsaletoitsshareholders.

B.Kate'sWineryhasexcesscashthatitwishestodistributetoitsshareholdersinadditiontoits

normalcashdividend.Thisextradistributionusuallyoccursaboutonceeveryyear.

C.Kurt'sMusicisplanningtoincreaseitsquarterlydividendbythreepercent.

D.TheDriedFloristispreparingtopayitsfirstannualdividendof$0.08pershare.

E.HiTekhadanextraordinarilyprofitableyearandhasdecidedtodoaone-timeonly$10per

sharecashdividend.

17.Whichoneofthefollowingeventsmustoccurbeforeafirmcanofferaliquidating

dividend?

A.Bankruptcyfiling

B.Insolvencydeclaration

C.Assetsale

D.Negativeequity

E.Failedbondissue

18.KelseyInternationaldeclaredadividendonFriday,November13,thatispayableonFriday,

December4,toholdersofrecordonMonday,November30.Whatisthelatestdatethatyoucan

purchasethisstockifyouwishtoreceivethisdividend?Assumetherearenobankingholidays

withinthisperiodoftime.

A.Tuesday,November24

B.Wednesday,November25

C.Thursday,November26

D.Friday,November27

E.Monday,November30

19.Whichoneofthefollowingdatesisthedateonwhichtheboardofdirectorsvotestopaya

dividend?

A.Recorddate

B.Declarationdate

C.Ex-dividenddate

D.Paymentdate

E.Settlementdate

20.Tuesday,December1,istheex-dividenddateforAlphastock.Whichoneofthefollowing

datesistherecorddate?Assumetherearenobankingholidaystoconsider.

A.Friday,November27

B.Monday,November30

C.Wednesday,December2

D.Thursday,December3

E.Friday,December4

21.ChelsieEnterprisesdeclaredadividendtoshareholdersofrecordonMonday,February8,

thatispayableonFriday,February26.Carlaknowsthatherdividendchecknormallyarrives

threebusinessdaysafterthecheckiswritten.Onwhichoneofthefollowingdaysshouldshe

expecttoreceiveherdividendcheck?

A.Wednesday,February10

B.Thursday,February11

C.Monday,March1

D.Tuesday,March2

E.Wednesday,March3

22.DavidsonInteriorsdeclaredadividendtoholdersofrecordonThursday,October15,thatis

payableonMonday,November2.Suenettepurchased200sharesofDavidsonInteriorsstock

onMonday,October12andJakepurchased100sharesofthisstockonthefollowingday.

Whichoneofthefollowingstatementsiscorrectgiventhisinformation?

A.BothSuenetteandJakewillreceivethisdividend.

B.SuenettewillreceivethedividendbutJakewillnot.

C.JakewillreceivethedividendbutSuenettewillnot.

D.NeitherSuenettenorJakewillreceivethisdividend.

E.Youcannotdeterminewhowillorwillnotreceivethisdividendbasedontheinformation

provided.

23.Twelvedaysago,DOG,Inc.declaredadividendof$1.34ashare.Theex-dividenddateis

tomorrow.Allelseconstant,whichoneofthefollowingisthebestestimateofDOG,Inc/s

openingstockpricetomorrow?

A.$1.34lowerthantoday*sclosingprice

B.today*sclosingpriceminusanamountapproximatelyequaltotheaftertaxvalueofthe

dividend

C.thesameastoday*sclosingpricesincethedividendisexpected

D.$1.34higherthantoday'sclosingprice

E.today'sclosingpriceplusanamountapproximatelyequaltotheaftertaxvalueofthe

dividend

24.Whichoneofthefollowingstatementsiscorrect?

A.Dividendsareirrelevant.

B.Flotationcostsareagoodreasontosupportahighdividendpayout.

C.Currenttaxlawsfavorhighcurrentdividendsforindividualinvestors.

D.Dividendpolicyisthetimepatternofdividendpayout.

E.Corporateinvestorstendtopreferlowdividendpayoutsonsecuritiestheyown.

25.Whichoneofthefollowingisanargumentthatdividendpolicyisirrelevant?

A.Flotationcostsastheyapplytoequities.

B.Taxlawsastheycurrentlyexist.

C.Anunsatisfieddemandforhigh-dividendpayingstocks.

D.Currentequilibriumintheclienteledividendmarket.

E.Thecurrenttaxexclusionavailabletocorporateinvestors.

26.Whichoneofthefollowingstatementsiscorrectconcerningthetaxationofdividendsand

capitalgains?

A.Seventypercentofcapitalgainsderivedfromstockinvestmentsaretaxexemptforcorporate

investors.

B.Dividendsareaformoftax-exemptincomeforindividualinvestors.

C.Allinvestorsaresubjecttothesametaxrateondividendincome.

D.Individualinvestorscandefertaxationonbothdividendsandcapitalgains.

E.Asof2003,individualinvestorspaya15percenttaxonbothdividendsandcapitalgains.

27.Whichoneofthefollowingwouldtendtofavoralowdividendpayout?

A.Highertaxratesoncapitalgainsthanondividendincome

B.Highflotationcostforequityissues

C.Endowmentfundinvestorswhocannotspendprincipal

D.Investors*desireforahighdividendyield

E.Eliminationofthetax-deferraloncapitalgains

28.Whichtwoofthefollowingtendtolimittheamountofdividendsthatcanbepaidbya

leveragedcorporation?

I.currenttaxlaws

II.corporatetaxexclusion

III.bondindenturecovenant

IV.statelawspertainingtoretainedearnings

A.IandIIonly

B.IandIIIonly

C.IIandIIIonly

D.IIandIVonly

E.IllandIVonly

29.Asof2003,themaximumtaxrateonlong-termcapitalgainsforhigh-incomeindividuals

waswhichoneofthefollowingrates?

A.10percent

B.15percent

C.20percent

D.35percent

E.39percent

30.Whichoneofthefollowingfactorsfavorsahighdividendpayout?

A.Lowtransactioncostsonstocktrades

B.Lowertaxesoncapitalgainsthanondividends

C.Taxdefermentoncapitalgains,butnotondividendincome

D.Flotationcosts

E.Corporateshareholders

31.Whatpercentofcapitalgainsareexcludedfromtaxationforcorporateshareholders?

A.0percent

B.10percent

C.25percent

D.70percent

E.75percent

32.PhilisreviewingABCCompany'sdividendpolicyasitrelatestothefirm'sshareholders.

Aspartofthisreview,hewantstodivideshareholdersintotwobasiccategoriesinrespectto

dividendpayments.Thefirstgroupwillbeshareholderswhoaretaxedondividendincomeand

thesecondgroupwillbeshareholderswhoreceivesomeformoftaxbreakondividendincome.

Whichofthefollowingtypesofshareholdersshouldbeplacedinthetax-favoredsecondgroup?

I.corporate

ILpensionfund

III.individuals

IV.trustfunds

A.Ionly

B.Illonly

C.IandIIIonly

D.IIandIVonly

E.I,II,andIVonly

33.Assumethatclientelesexist.Giventhisassumption,whichoneofthefollowingstatements

iscorrect?

A.Afirmcanincreaseitssharepricebyincreasingitsdividendpayout.

B.Dividendpolicyisirrelevantaslongaseachclientelegroupiscurrentlysatisfied.

C.Allfirmswilladoptahighdividendpayoutpolicy.

D.Alldividendsbecomeirrelevant.

E.Allfirmsshouldadoptalowdividendpayoutpolicy.

34.Martin&Martin,Inc.stockiscurrentlysellingfor$19pershare.Thefirmjustmadean

offertooneofitsmajorshareholderstorepurchaseallthesharesownedbythatshareholderfor

$25pershare.Whattypeofofferisbeingmade?

A.Rightsoffer

B.Secondaryissue

C.Targetedrepurchase

D.Tenderoffer

E.Privateissue

35.JosephTurnerandSonshas125,000sharesofstockoutstanding.Thefirmhasextracashso

itannouncedthismorningthatitiswillingtorepurchase25,000ofitsshares.Whattypeofoffer

isthefirmmaking?

A.Rightsoffer

B.Secondaryissue

C.Targetedrepurchase

D.Tenderoffer

E.Privateissue

36.Whichofthefollowingaremeansbywhichafirmcanreduceitsnumberofoutstanding

shares?

I.openmarketpurchase

ILrightsoffer

III.tenderoffer

IV.targetedrepurchase

A.IVonly

B.IandIVonly

C.II,III,andIVonly

D.I,IIIandIVonly

E.I,II,III,andIV

37.Kelso'sisconsideringspending$80,000oneitherastockrepurchaseoranextracash

dividend.Whichoneofthefollowingvalueswillbethesamewhetherthefirmpaysadividend

orrepurchasesstock?Assumetherearenotaxesormarketimperfections.

A.Numberofsharesoutstanding

B.Pricepershare

C.Earningspershare

D.Price-earningsratio

E.Marketvalueofequitypershare

38.Whichoneofthefollowingwillresultfromastockrepurchase?

A.Increaseinthenumberofsharesoutstanding

B.Decreaseintheearningspershare

C.Decreaseinthemarketpricepershare

D.Increaseinthemarketvalueofequitypershare

E.DecreaseintheP/Eratio

39.ElkinsFeedLotisanall-equityfirmwithpositivenetincome.Whichoneofthefollowing

willresultifthefirmpaysacashdividend?

A.Numberofsharesoutstandingwillincrease

B.Earningspersharewilldecrease

C.Totalassetswillremainconstant

D.Price-earningsratiowilldecrease

E.Totalequitywillincrease

40.Assumetherearenotaxesorimperfections.Giventhisassumption,whichoneofthe

followingstatementsiscorrect?

A.Acashdividendhasnoeffectonthemarketpriceofthepayer'sstock.

B.Acashdividenddecreasesshareholderwealth.

C.Stockrepurchasesdecreasethemarketvaluepershare.

D.Bothacashdividendandasharerepurchaseincreaseafirm'sPEratio.

E.Astockrepurchasehasthesameeffectonafirm'smarketvaluebalancesheetasdoesacash

dividend.

41.Giventhecurrenttaxlaws,whichoneofthefollowingstatementsiscorrect?

A.Bothstockrepurchasesandcashdividendsaretreatedequallyfortaxpurposesforindividual

shareholders.

B.Stockrepurchasesgiveindividualshareholdersmorecontrolovertheirpersonaltaxesthan

docashdividends.

C.Cashdividendsarepreferabletostockrepurchasesfromtheindividualshareholderpointof

view.

D.Stockrepurchasesoffermoretaxbenefitstotheissuerthandocashdividends.

E.Cashdividendsoffermoretaxbenefitsthandostockrepurchasesfortheissuer.

42.Whichoneofthefollowingstatementsrelatedtostockbuybacksiscorrect?

A.Stockbuybacksareameansofobtainingsharesforemployeestockoptiongrants.

B.Stockbuybacksarebecomingrareandmaysoondisappeartotally.

C.In2007and2008,U.S.companiesissuedmoresharesthantheyrepurchased.

D.Firmsareonlypermittedonelargesharerepurchaseprogram.

E.Sharerepurchasesarelimitedto10percentofthefirm'soutstandingshares.

43.Ascomparedtoacashdividend,asharerepurchasewilldowhichofthefollowing?

A.IncreasebothearningspershareandthePEratio

B.IncreasetheearningspersharebutnotaffectthePEratio

C.IncreasetheearningspershareanddecreasethePEratio

D.NotaffecteithertheearningspersharenorthePEratio

E.NotaffecttheearningspersharebutwilldecreasethePEratio

44.Whichoneofthefollowingstatementsiscorrect?

A.Generallyspeaking,thesizeofafirmhasnoeffectonitstendencytopaydividends.

B.Themarketcrashandtheaccountingscandalsintheearly2000*stendedtocausefinancially-

stablefirmstoceasepayingcashdividends.

C.Themajorityoffirmseitherstartedpayingorincreasedtheirdividendspershareinresponse

totheMay2003changeindividendtaxation.

D.Firmstendtoprefercashdividendsoversharerepurchasesfortheirflexibilityandtax

benefits.

E.Anon-dividendpayingfirmismoreapttodoastockrepurchasethantocommencepaying

dividends.

45.WhichofthefollowingarefactorsthathelpexplainwhythepercentageofU.S.industrial

firmspayingdividendshasincreasedsincetheearly2000s?

I.decreaseinthenumberofnon-dividendpayingfirms

II.maturingofyoung,successfulfirms

III.signalingofafirm'sfinancialhealth

IV.May2003taxact

A.IandIIIonly

B.IIandIVonly

C.I,II,andIIIonly

D.II,III,andIVonly

E.I,II,III,andIV

46.WhichoneofthefollowingstatementsiscorrectconcerningdividendsintheU.S.?

A.ThetotalamountofdividendspaidbytheS&P500companieshasincreasedsteadilyevery

yearsince1985.

B.Onlyfinancialsectorfirmsdecreaseddividendsin2008.

C.Dividendamountstendtoreactquicklytochangesintheeconomy.

D.Firmstendtoquicklyadjusttheirdividendstochangesinthefirm'searningspershare.

E.Therearelessthan75companiesintheU.S.thathaveconsistentlyincreasedtheirdividends

foratleastthepast25years.

47.Researchconductedonfirms*dividendpoliciesovertimesupportwhichoneofthe

followingconclusions?

A.Aggregatedividendsandstockrepurchaseshavesteadilydeclinedinrealterms.

B.Dividendsarecurrentlypaidbythevastmajorityoffirms.

C.Managerstendtosmoothdividends.

D.Stockpricestendtoincreasewheneveranticipatedchangesindividendsoccur.

E.Firmscommencepayingdividendspriortodoinganystockrepurchases.

48.Cashdividendssendwhichtwoofthefollowingsignalstothemarket?

I.agencycostswillbeloweredsincelesscashwillbeheldbythefirm

ILthefirmisplanningondownsizing

III.thefirmiscurrently,andexpectstocontinuetobe,profitable

IV.thefirmwillnolongerconductstockrepurchases

A.IandIIonly

B.IIandIIIonly

C.IllandIVonly

D.IIandIVonly

E.IandIIIonly

49.Whichoneofthesestatementsiscorrect?

A.Sincetheearly1980's,ithasbecomeincreasinglymoredifficulttodoastockrepurchasedue

toSECregulations.

B.Itisrelativelyeasytodeterminewhetherornotafirmhascompletedaplannedstock

repurchase.

C.Fixedstockrepurchasesallowmanagerstorepurchasesharesonlywhentheyfeelthose

sharesareundervalued.

D.Afixedstockrepurchaseplancouldbeanegativenetpresentvalueinvestmentforthestock

issuer.

E.Stockrepurchasessendtheexactsamesignalstoinvestorsasdocashdividends.

50.Whichoneofthefollowingisadrawbackofcashdividends?

A.Firmsmayhavetoforegopositivenetpresentvalueprojects.

B.Stockpricestendtoincreaseasannualdividendamountsincrease.

C.Cashdividendssupportstockprices.

D.Dividendsarefelttobedirectlyrelatedtoagencycosts.

E.Dividend-payingfirmstendtoattractawiderfieldofinvestorsthandonon-dividend-paying

firms.

51.Whichoneofthefollowingtendstobetheprimaryattitudeoffirms*towardstheirdividend

policy?

A.Dividendsshouldbeincreasedannuallynomatterwhat.

B.Dividendsshouldbeflexibleandadjustedannuallyinresponsetochangesinthefirm's

earnings.

C.Thecostsassociatedwithcuttingdividendsareperceivedtobelessthanthecostsof

obtainingexternalfinancing.

D.Onceadividendisincreased,itshouldnotbedecreased.

E.Dividendsmoothingistalkedaboutbutisnotreallyafactorthataffectsdividenddecisions.

52.LexingtonStablesjustdeclareda15percentstockdividend.Whichoneofthefollowing

increasedby15percentasaresultofthisdividend?

A.Bookvalueoffirm'sequity

B.Shareholders*wealth

C.Numberofsharesoutstanding

D.Firm'scashbalance

E.Stockprice

53.Whichoneofthefollowingisbasicallyequivalenttoa2-for-lstocksplit?

A.20percentstockdividend

B.25percentstockdividend

C.50percentstockdividend

D.100percentstockdividend

E.200percentstockdividend

54.MercuryHomesjustdeclareda4-for3stocksplit.Whichofthefollowingoccurredasa

resultofthissplit?

I.numberofsharesoutstandingincreasedby1/3

ILnumberofsharesoutstandingdecreasedby1/4

III.pricepershareincreasedby1/3

IV.pricepersharedecreasedby1/4

A.Ionly

B.IandIIIonly

C.IandIVonly

D.IIandIIIonly

E.IIandIVonly

55.Ofthefollowing,whichtwoarethebestreasonsfordoingareversestocksplit?

I.returnastocktoitsnormaltradingrange

II.eliminatesmallshareholders

III.reduceshareholdercosts

IV.avoiddelisting

A.IandII

B.IandIII

C.IIandIII

D.IIandIV

E.IllandIV

56.ThecommonstockofGallaghan'sclosedat$36.80asharetoday.Tomorrowmorning,the

stockgoesex-dividend.Thedividendthatisbeingpaidthisquarteris$1.40ashare.Thetax

rateondividendsis15percent.Allelseequal,whatshouldtheopeningstockpricebetomorrow

morning?

A.$35,19

B.$35.40

C.$35.52

D.$35.61

E.$35.70

57.WestoverElectricispreparingtopayitsquarterlydividendof$2.20asharethisquarter.

Thestockclosedat$57.70asharetoday.Whatwilltheex-dividendstockpricebeifthe

relevanttaxrateis10percentandallelseisheldconstant?

A.$55.28

B.$55.50

C.$55.72

D.$55.94

E.$55.99

58.ThecommonstockofPateeInternationalgoesex-dividendtomorrow.Thestockclosedata

priceof$33.60asharetoday.Thisquarter,thecompanyispayingacashdividendof$0.24a

shareandaliquidatingdividendof$0.60ashare.Ignoringtaxesandassumingthatallelseis

heldconstant,whatwilltheex-dividendpricebetomorrowmorning?

A.$32.76

B.$33.00

C.$33.36

D.$33.96

E.$34.23

59.HarrisBrothersjustannounceditwillbepayinganannualdividendof$0.85ashareplusan

extradividendof$0.30asharethisyear.Thecompanyalsoannouncedthatitsregulardividend,

whichisallitanticipatespayingafterthisyear,willincreaseby3.5percentannually.Whatis

theanticipateddividendpersharenextyear?

A.$0.82

B.$0.85

C.$0.88

D.$1.15

E.$1.19

60.KeyserTruckingjustpaiditsannualregularcashdividendof$1.22ashare,alongwitha

specialdividendof$0.25ashare.Thecompanyfollowsapolicyofincreasingitsdividendby2

percentannually.Whichoneofthefollowingisthebestestimateofthefirm'snextannual

dividendpayment?

A.$1.22

B.$1.24

C.$1.49

D.$1.50

E.$1.54

61.GlobalTradershascommonstockoutstandingatamarketpriceof$53pershare.Thetotal

marketvalueofthefirmis$6,603,800.Thefirmplansonliquidatingoneofitsdivisionsfor

$548,000incashanddistributingtheproceedstotheshareholdersintheformofaliquidating

dividend.Whatwillbetheamountpershareofthatdividend?

A.$4,197

B.$4,398

C.$4,620

D.$4,714

E.$4,782

62.SouthernFoodsrecentlyliquidateditsfastfooddivision.Thatunitrepresented20percent

ofthefirm'soverallmarketvalue.Priortotheliquidation,thefirm'sstockwassellingfor$43a

share,theannualdividendwassteadyat$1.20pershare,andtherewere16,000shares

outstanding.Thefirmispreparingtodistributetheentireliquidationproceedstoshareholders.

Howmuchwilltheliquidatingdividendbepershare?

A.$0,24」

B.$0.36

C.$6.10

D.$7.40

E.$8.60

63.NealFabricatorsjustliquidateditspoorestperformingdivisionandrealizednetproceeds

fromthetransactionof$2.6million.Thefirmhas180,000sharesofstockoutstandingata

marketpriceof$64ashare.Whichoneofthefollowingisthebestestimateofthestock's

post-dividendpricepershareifthefirmdistributestheentireliquidationproceedsintheformof

aliquidatingdividend?Ignoretaxesandmarketimperfections.

A.$49.56〜

B.$51.38

C.$53.40

D.$58.79

E.$64.00

64.HaywoodandMorehaveamarketvaluebalancesheetasshownbelow.Thefirmcurrently

has5,000sharesofstockoutstandingatamarketpricepershareof$35.40.Netincomeis

$9,500.」

MarketValueBalanceSheet

Excesscash$8,000Debt$0

Otherassets203,000Equity211,000

Total$211,000Total$211,000

Thefirmhasdecidedtospend$8,000andpayanextracashdividend.Whatwillthefirm'sPE

ratiobeafterthisdividendispaid,allelseheldconstant?Ignoretaxes.

A.14.20」

B.16.67

C.18.63

D.21.22

E.24.50

65.Lester'shasamarketvaluebalancesheetasshownbelow.Thefirmcurrentlyhas7,500

sharesofstockoutstandingatapricepershareof$40.Netincomeis$9,500.

MarketValueBalanceSheet

Excesscash$20,000Debt$0

Otherassets368,000Equity388,000

Total$388,000Total$388,000

Thefirmhasdecidedtorepurchase$20,000worthofitsoutstandingstock.Whatwillthefirm's

PEratiobeafterthisrepurchase,allelseheldconstant?

A.23.39

B.28.76

C.29.47

D.30.13

E.32.16

66.Zacariah'sNurseryhas6,000sharesofstockoutstandingatamarketpriceof$20ashare.

Theearningspershareare$1.54.Thefirmhastotalassetsof$315,000andtotalliabilitiesof

$186,000.Today,thefirmispayinganannualcashdividendof$0.80ashare.Ignoretaxes.

Whatwilltheearningspersharebeafterthedividendispaid?

A.$0.31一

B.$0.74

C.$1.54

D.$20.70

E.$21.02

67.Aaron'sNurseryhas6,000sharesofstockoutstandingatamarketpriceof$20ashare.The

earningspershareare$1.54.Thefirmhastotalassetsof$315,000andtotalliabilitiesof

$186,000.Today,thefirmisrepurchasing$4,800worthofstock.Ignoretaxes.Whatwillthe

earningspersharebeafterthestockrepurchase?

A.$1,2831

B.$1,232

C.$1,540

D.$1,604

E.$1,848

68.Dorchester,Inc.has7,500sharesofstockoutstandingatamarketpriceof$42eachand

earningspershareof$1.80.Thefirmhasdecidedtorepurchase$63,000worthofstock.What

willthePEratiobeaftertherepurchase,allelseheldconstant?

A.$1.30

B.$1.44

C.$1.80

D.$2.02

E.$2.25

69.Gloria'sBoutiquehas4,000sharesofstockoutstandingatapricepershareof$19.What

willthepricepersharebeifthefirmpaysa$1.20persharedividend?Ignoretaxesandmarket

imperfections.

A.$17.80

B.$18.40

C.$18.80

D.$19.00

E.$20.20

70.Gloria'sBoutiquehas4,000sharesofstockoutstandingatapricepershareof$19.Thefirm

hasdecidedtorepurchase500ofthosesharesintheopenmarket.Whatwillthepricepershare

beafterthesharerepurchaseiscompleted?Ignoretaxesandmarketimperfections.

A.$17.80'

B.$18.40

C.$18.80

D.$19.00

E.$20.20

71.CookiesandMorehas8,000sharesofstockoutstandingatamarketpriceof$13.60per

share.Whatwillthepricepershare