Strayer University - FIN 534 Week 10 Complete Quiz. A+ Graded. Latest 2021.Question 1
4 out of 4 points
If a firm adheres strictly to the residual
... [Show More] dividend policy, the issuance of new common stock
would suggest that
Answer
Selected Answer:
no dividends were paid during the year.
Correct Answer:
no dividends were paid during the year.
Question 2
4 out of 4 points
Which of the following statements is CORRECT?
Answer
Selected
Answer:
If a firm's stock price is quite high relative to most stockssay $500 per
sharethen it can declare a stock split of say 10-for-1 so as to bring the price
down to something close to $50. Moreover, if the price is relatively lowsay $2
per sharethen it can declare a "reverse split" of say 1-for-25 so as to bring the
price up to somewhere around $50 per share.
Correct
Answer:
If a firm's stock price is quite high relative to most stockssay $500 per
sharethen it can declare a stock split of say 10-for-1 so as to bring the price
down to something close to $50. Moreover, if the price is relatively lowsay $2
per sharethen it can declare a "reverse split" of say 1-for-25 so as to bring the
price up to somewhere around $50 per share.
Question 3
4 out of 4 points
Which of the following statements is correct?
Answer
Selected
Answer:
If a company wants to raise new equity capital rather steadily over time, a new
stock dividend reinvestment plan would make sense. However, if the firm does
not want or need new equity, then an open market purchase dividend
reinvestment plan would probably make more sense.
Correct
Answer:
If a company wants to raise new equity capital rather steadily over time, a new
stock dividend reinvestment plan would make sense. However, if the firm does
not want or need new equity, then an open market purchase dividend
reinvestment plan would probably make more sense.
Question 4
4 out of 4 points
Poff Industries' stock currently sells for $120 a share. You own 100 shares of the stock. The
company is contemplating a 2-for-1 stock split. Which of the following best describes what your
position will be after such a split takes place?
Answer
Selected
Answer:
You will have 200 shares of stock, and the stock will trade at or near $60 a
share.
Correct Answer:
You will have 200 shares of stock, and the stock will trade at or near $60 a
share.
Question 5
4 out of 4 points
In the real world, dividends
Answer
Selected Answer:
are usually more stable than earnings.
Correct Answer:
are usually more stable than earnings.
Question 6
4 out of 4 points
Consider two very different firms, M and N. Firm M is a mature firm in a mature industry. Its
annual net income and net cash flows are both consistently high and stable. However, M's
growth prospects are quite limited, so its capital budget is small relative to its net income. Firm
N is a relatively new firm in a new and growing industry. Its markets and products have not
stabilized, so its annual operating income fluctuates considerably. However, N has substantial
growth opportunities, and its capital budget is expected to be large relative to its net income
for the foreseeable future. Which of the following statements is correct?
Answer
Selected Answer:
Firm M probably has a higher dividend payout ratio than Firm N.
Correct Answer:
Firm M probably has a higher dividend payout ratio than Firm N.
Question 7
4 out of 4 points
Which of the following statements is correct?
Answer
Selected
Answer:
If a firm repurchases some of its stock in the open market, then shareholders
who sell their stock for more than they paid for it will be subject to capital gains
taxes.
Correct
Answer:
If a firm repurchases some of its stock in the open market, then shareholders
who sell their stock for more than they paid for it will be subject to capital gains
taxes. [Show Less]