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LOS a: Review cash dividends, stock dividends, stock splits, and reverse stock splits and calculate and discuss their impact on a shareholder's wealth.
Q1. Which justification for repurchasing stock is the least valid?
A) Shareholders prefer capital gains to cash dividends.
B) Repurchases offer shareholders more choices than cash dividends.
C) A cash dividend increase, in response to short-term excess cash flows, may confuse investors.
Q2. Which of the following statements about dividend policy and capital structure is most accurate?
A) Investors view a stock repurchase as a positive signal and a stock issue as a negative signal.
B) A person who believes in the clientele effect and a proponent of the "bird-in-hand" theory would have similar views on dividend payout policy.
C) Monte Carlo simulation is used to estimate market risks; scenario analysis measures stand-alone risk.
Q3. A periodic payment to shareholders in the form of additional shares of stock instead of cash is a:
A) dividend reinvestment plan
B) stock repurchase
C) stock dividend
Q4. Stock splits:
A) are less common than stock dividends.
B) increase firm value.
C) do not in and of themselves affect firm value
Q5. Financial managers utilize stock splits and stock dividends because they perceive that:
A) investors will double the share price if there is a 20% stock dividend.
B) brokerage fees paid by shareholders will be reduced.
C) an optimal trading range exists.
Q6. Which of the following statements about a stock repurchase is least accurate?
A) Disgruntled stockholders are forced to sell their shares, improving management's position.
B) A stock repurchase occurs when a large block of stock is removed from the marketplace.
C) Management can distribute cash to shareholders without signaling about future earnings. | 
发表于 2009-3-4 14:25
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