Dividends and Other Payouts

Which of the following best describes a stock dividend?

What is the primary difference between a stock split and a stock dividend?

Which of the following defines a stock repurchase?

What is a liquidating dividend?

What is the correct chronological order of the four key dates in the cash dividend payment process?

In a perfect capital market with no taxes or transaction costs, by how much would a stock's price be expected to fall on the ex-dividend date?

Diamond Hill Investment Group paid a dividend of 13 dollars per share when its stock was trading around 85 dollars. If the personal tax rate on dividends is 15 percent, what would be the expected price drop on the ex-dividend date, assuming no capital gains taxes?

An investor who purchases a stock on the business day immediately before the ex-dividend date will receive the declared dividend. Who receives the dividend if the purchase is made on the ex-dividend date?

What is the central argument of the Miller-Modigliani dividend irrelevance proposition?

What does the concept of 'homemade dividends' illustrate?

An investor prefers an annual dividend of 11 dollars per share but the company they have invested in, which exists for two years, has a policy of paying 10 dollars per share in both year 0 and year 1. The required return is 10 percent. How can this investor create their desired 'homemade dividend' of 11 dollars in year 0?

According to the dividend irrelevance theory, which action should a firm never take to increase its dividend payment?

Bristol Corporation will receive 10,000 dollars in cash flow at Date 0 and 10,000 dollars at Date 1. The firm has 1,000 shares outstanding and the discount rate is 10 percent. If the firm pays out 11,000 dollars in dividends at Date 0 by issuing new stock, what is the present value per share for the original stockholders?

Which of the following describes a 'tender offer' as a method of stock repurchase?

In a Dutch auction for a stock repurchase, how is the final price paid to shareholders determined?

Telephonic Industries has 100,000 shares outstanding. It can either pay a 3 dollar per share dividend or repurchase shares. After either action, its forecasted annual earnings will be 450,000 dollars. If the company chooses to repurchase shares at 30 dollars each, what will the new earnings per share (EPS) be?

In a perfect capital market, is an increase in Earnings Per Share (EPS) resulting from a stock repurchase necessarily beneficial to shareholders?

What is a primary real-world reason that firms might prefer share repurchases over dividends when dealing with temporary increases in cash flow?

Why might a CEO with a large number of stock options prefer that the company conduct a share repurchase instead of paying a cash dividend?

In a world with personal taxes, why is it generally argued that firms should not issue new stock to finance a dividend payment?

Under current U.S. tax law, what is the primary tax advantage of a share repurchase compared to a cash dividend for a shareholder selling their shares?

Which of the following is NOT considered a valid alternative for a firm with excess cash, instead of paying a dividend?

Regional Electric Company has 1,000 dollars of extra cash. The corporate tax rate is 34 percent and the personal tax rate on interest is 28 percent. If the company invests the cash in Treasury bills yielding 10 percent, what will the firm have after five years before paying dividends?

What is the primary argument against the 'desire for current income' theory as a justification for high dividend payouts in a perfect capital market?

In the real world, why are transaction costs an important consideration in the debate over dividend policy?

How does behavioral finance, specifically the concept of self-control, explain why some investors might prefer high-dividend stocks?

How can the payment of dividends be viewed as a tool to mitigate agency costs between a firm's stockholders and bondholders?

According to the free cash flow hypothesis, how can a firm's board of directors use dividends to reduce agency costs related to management?

What is the 'information content effect' of a dividend?

What is the primary trade-off a manager faces when considering a dividend increase as a false signal to boost the stock price?

Which of the following best describes the dividend signaling argument?

What does the 'clientele effect' suggest about the overall market for dividends?

According to the clientele effect, which investor group is most likely to prefer high-payout stocks?

A financial manager believes her company can increase its stock price by initiating a high dividend policy because many investors desire current income. According to the clientele effect theory, why is this manager likely incorrect?

What pattern does the research by Graham and Kumar reveal about the investment preferences of retail investors with different income levels?

What does the life cycle theory of payouts suggest about when a firm should begin making cash distributions like dividends or repurchases?

Which of the following statements about manager behavior regarding dividends is supported by empirical evidence?

How do stock repurchases typically behave in relation to earnings, as compared to dividends?

What is the primary difference in the accounting treatment of a small stock dividend versus a stock split?

Peterson Co. has 10,000 shares of stock outstanding, each selling at 66 dollars, for a total equity market value of 660,000 dollars. If the company declares a two-for-one stock split, what is the expected market value of the firm's total equity after the split?

Peterson Co. has the following equity accounts: Common stock (1 dollar par, 10,000 shares) at 10,000 dollars; Capital surplus at 200,000 dollars; and Retained earnings at 290,000 dollars. The stock sells for 66 dollars. If the company declares a 10 percent stock dividend (a small stock dividend), what will be the new balance in the Retained Earnings account?

What is the 'popular trading range' argument often used to justify stock splits?

What happens to the number of shares and the par value per share in a one-for-five reverse stock split?

Which of the following is a common reason for a company to conduct a reverse stock split?

What distinguishes an 'extra cash dividend' from a 'regular cash dividend'?

Why is a stock dividend considered 'not a true dividend'?

In the Diamond Hill example, the stock price dropped by 12.67 dollars after a 13 dollar per share dividend was paid. The tax-adjusted expected drop was 11.05 dollars. What might this difference suggest?

Based on the survey evidence presented in Table 19.2, which of the following is the highest priority for financial managers when setting dividend policy?

According to the survey evidence in Table 19.3, how important do financial managers consider the personal taxes their stockholders pay when making dividend decisions?

Telephonic Industries has 100,000 shares and excess cash of 300,000 dollars. It plans to pay this cash out as an extra dividend. After the dividend, its forecasted annual earnings are 450,000 dollars and its PE ratio will be 6. What will be the market value of the stock per share after the dividend is paid?