Chapter 14 - Dividends and Dividend PolicyChapter 14Dividends and Dividend Policy Multiple Choice Questions1.Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firms shareholders?A.InterestB.DistributionC.Retained earningsD.DividendE.Stock repurchase2.Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?A.InterestB.DistributionC.Retained earningsD.DividendE.Stock repurchase3.Which one of the following best defines a regular cash dividend?A.Distribution by a firm to its shareholdersB.Payment from any source by a firm to its ownersC.One-time payment of cash by a firm to its shareholdersD.Cash payment by a firm to its owners as part of a firms normal operationsE.Distribution of the proceeds from the sale of a portion of a firms operations4.Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?A.Date of recordB.Ex-dividend dateC.Payment dateD.Declaration dateE.Public announcement date5.The ex-dividend date is defined as _ day(s) before the date of record.A.three businessB.threeC.two businessD.twoE.one6.On which one of the following dates is the determination made as to which shareholders will receive a dividend payment?A.Date of recordB.Ex-dividend dateC.Payment dateD.Declaration dateE.Public announcement date7.On which one of the following dates are dividend checks mailed?A.Date of recordB.Ex-dividend dateC.Payment dateD.Declaration dateE.Public announcement date8.The clientele effect states that investors fall into various groups because of differences in their preferences for which one of the following?A.Share price levelsB.Risk levelC.Short-term versus long-term investmentsD.Rates of returnE.Dividends9.This morning, Lambert Materials bought 10,000 of its outstanding shares in the open market. What type of transaction was this?A.Stock payoutB.Stock distributionC.Stock dividendD.Stock repurchaseE.Stock reversal10.Which one of the following is a non-cash payment made by a firm to its shareholders and is a payment that lessens the value of each outstanding share?A.Reverse stock splitB.Cash distributionC.Stock dividendD.Regular dividendE.Liquidating dividend11.Which one of the following increases the number of shares outstanding but does not increase the value of owners equity?A.Stock repurchaseB.Reverse stock splitC.Stock splitD.Cash distributionE.Liquidating dividend12.During the past year, ABC stock has sold for as little as $19 a share and a much as $33 a share. Which one of the following terms applies to these prices?A.Benchmark valuesB.Price splitsC.Price dividersD.Split rangeE.Trading range13.Which one of the following reduces the number of shares outstanding but does not change a firms total equity?A.Stock splitB.DistributionC.Reverse splitD.LiquidationE.Redemption14.Lesters Dry Goods paid $1.10 per share in dividends last year. The company currently has excess cash and would like to distribute $0.40 a share to its shareholders. However, the company is concerned about increasing the dividend by that amount as it will not be able to afford any increase in the future and doesnt want to lower the dividend once it has been raised. Which one of the following is probably the best suggestion for distributing the $0.40 per share?A.Special dividend of $0.40 per shareB.Extra cash dividend of $0.40 per shareC.Liquidating dividend of $0.40 per shareD.Increase the regular dividend by $0.11 and pay a special dividend of $0.29E.Increase the regular dividend by $0.11 and pay an extra cash dividend of $0.2915.Downtown Merchants has paid a quarterly dividend of $0.60 per share for the past two years. This quarter, the firm plans to pay $0.60 plus an additional $0.05. The firm has stated that it uncertain whether it will pay $0.60 or $0.65 per share next quarter. Which one of the following is the best description of the additional $0.05 that is being paid this quarter?A.Liquidating dividendB.Special dividendC.Extra dividendD.Stock dividendE.Normal dividend16.Which one of the following is an example of a liquidating dividend?A.Valley Feed Mills recently sold its grain storage facility and is distributing the proceeds of that sale to its shareholders.B.Kates Winery has excess cash that it wishes to distribute to its shareholders in addition to its normal cash dividend. This extra distribution usually occurs about once every year.C.Kurts Music is planning to increase its quarterly dividend by three percent.D.The Dried Florist is preparing to p