Question 1

Blasco's has a market value equal to its book value.Currently, the firm has excess cash of $1,332, other assets of $11,674, and equity of $7,200.The firm has 1,200 shares of stock outstanding and net income of $838.Blasco's has decided to spend one-third of its excess cash on a share repurchase program.How many shares of stock will be outstanding after the stock repurchase is completed?

Accepted Answer

A)  937 shares
B)  1,050 shares
C)  1,126 shares
D)  1,578 shares
E)  1,584 sharesF) A) and C)
G) A) and D)

Question 2

Bell Weather Markets has recently sold for as little as $8 a share and as much as $15 a share.The difference between these two prices is referred to as the:

Accepted Answer

A)  price variance.
B)  bid-ask spread.
C)  trading range.
D)  opening price.
E)  closing price.F) All of the above
G) D) and E) C

Question 3

A small stock dividend is defined as a stock dividend of less than _____ percent.

Accepted Answer

A)  10 to 15
B)  15 to 20
C)  20 to 25
D)  25 to 30
E)  30 to 35F) A) and E)
G) A) and D)

Question 4

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently, the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

Accepted Answer

A)  4,800 shares
B)  9,600 shares
C)  18,000 shares
D)  36,000 shares
E)  32,200 sharesF) A) and E)
G) B) and D)

Question 5

The board of directors of Wilson Sporting Equipment met this afternoon and passed a resolution to pay a cash dividend of $0.42 a share next month.In relation to this dividend, today is referred to as which one of the following dates?

Accepted Answer

A)  decision date
B)  date-of-record
C)  declaration date
D)  payment date
E)  ex-dividend dateF) D) and E)
G) C) and D)

Question 6

Revol-Tech is a technology firm with excellent growth prospects.The firm wishes to do something to acknowledge the loyalty of the shareholders but needs all of its available cash to fund the firm's rapid growth.The market price of the stock is currently trading at the upper end of its preferred trading range.The firm is most apt to consider which one of the following in this situation?

Accepted Answer

A)  liquidating dividend
B)  stock split
C)  reverse stock split
D)  small stock dividend
E)  special cash dividendF) None of the above
G) B) and E)

Question 7

Built Rite Corp.is evaluating an extra dividend versus a share repurchase.In either case, $5,500 would be spent.Current earnings are $0.80 per share, and the stock currently sells for $33 per share.There are 250 shares outstanding.Ignore taxes and other imperfections.You own one share of stock in this company.If the company issues the dividend, your total investment will be worth ____ as compared to ____ if the company opts for a share repurchase.

Accepted Answer

A)  $11; $11
B)  $11; $22
C)  $11; $33
D)  $23; $33
E)  $33; $33F) C) and E)
G) None of the above

Question 8

The Green Florist has 28,000 shares of stock outstanding with a par value of $1 per share and a market value of $7 a share.The company just announced a 2-for-5 reverse stock split.Currently, you own 300 shares of this stock.How many shares will you own after the reverse stock split?

Accepted Answer

A)  60 shares
B)  120 shares
C)  480 shares
D)  600 shares
E)  750 sharesF) All of the above
G) B) and D)

Question 9

Jean's Warehouse has 16,000 shares of stock outstanding.The current market value of the firm is $768,000.The company has retained earnings of $130,000, paid in surplus of $321,000, and a common stock account value of 16,000.The company is planning a 5-for-3 stock split.What will the retained earnings account value be after the split?

Accepted Answer

A)  $73,800
B)  $130,000
C)  $153,600
D)  $205,000
E)  $245,500F) A) and D)
G) None of the above

Question 10

Which one of the following is a result of a small stock dividend?

Accepted Answer

A)  increase in retained earnings
B)  decrease in total owner's equity
C)  decrease in cash
D)  decrease in capital in excess of par value
E)  increase in common stockF) A) and B)
G) A) and C) E

Question 11

Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share.The firm just announced a 4-for-3 stock split.How many shares of stock will be outstanding after the split?

Accepted Answer

A)  9,000 shares
B)  10,000 shares
C)  12,000 shares
D)  14,600 shares
E)  16,000 sharesF) A) and B)
G) B) and E)

Question 12

A stock repurchase program:

Accepted Answer

A)  requires all shareholders to sell a fraction of their shares.
B)  is preferred over a high-dividend program only by tax-exempt shareholders.
C)  decreases both the number of shares outstanding and the market price per share.
D)  has no effect on a firm's financial statements.
E)  is essentially the same as a cash dividend program provided there are no taxes or other costs.F) A) and B)
G) A) and C)

Question 13

Explain the meaning of the dividend clientele effect and why it is important.

Accepted Answer

There are certain groups that prefer low dividend payouts and certain groups that prefer high dividend payouts; these are dividend clientelesIf clienteles exist, then whenever a firm changes its dividend policy, it just swaps one clientele for anotherIn the end, the firm cannot affect its value by making changes in its dividend policy unless there are unsatisfied clienteles

Question 14

A reverse stock split is defined as:

Accepted Answer

A)  an increase in the number of shares outstanding that does not affect owners' equity.
B)  a firm buying back existing shares of its stock on the open market.
C)  a firm selling new shares of stock on the open market.
D)  a decrease in the number of shares outstanding that does not affect owners' equity.
E)  a decrease in both the number of shares outstanding and the price per share.F) C) and E)
G) None of the above

Question 15

Cooper Brands, Inc., has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Accepted Answer

A)  $50.40
B)  $58.20
C)  $62.50
D)  $78.75
E)  $82.50F) C) and D)
G) B) and E)

Question 16

Val's Marina Supply has 3,500 shares of stock outstanding with a par value of $1.00 per share and a market value of $19 per share.The balance sheet shows $3,500 in the common stock account, $24,000 in the capital in excess of par account, and $31,400 in the retained earnings account.The firm just announced a 100 percent stock dividend.What is the value of the capital in excess of par account after the dividend?

Accepted Answer

A)  $0
B)  $20,500
C)  $24,000
D)  $55,500
E)  $87,000F) A) and B)
G) C) and E)

Question 17

Which one of the following is a direct result of a 2-for-1 stock split?

Accepted Answer

A)  a 100 percent increase in the number of shareholders
B)  a 100 percent increase in the common stock account balance
C)  a 100 percent decrease in the stock price
D)  a 50 percent increase in the number of shares outstanding
E)  a 50 percent decrease in the par value per shareF) A) and C)
G) A) and B)

Question 18

Which one of the following refers to the ability of shareholders to undo a firm's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock?

Accepted Answer

A)  perfect foresight model
B)  personalization
C)  recapitalization
D)  offsetting leverage
E)  homemade dividend policyF) A) and E)
G) C) and E)

Question 19

Taylor's Tools declared a $0.48 per share dividend on Friday, March 7.The dividend will be paid on Monday, April 7.The ex-dividend date is Tuesday, March 18.What is the record date?

Accepted Answer

A)  Friday, March 14
B)  Monday, March 17
C)  Wednesday, March 19
D)  Thursday, March 20
E)  Friday, March 21F) C) and D)
G) A) and D)

Question 20

Which one of the following statements is correct?

Accepted Answer

A)  Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need.
B)  Share repurchases tend to increase agency costs.
C)  Maintaining a steady dividend is a key goal of most dividend-paying firms.
D)  Tax rates are the key factor in determining a firm's dividend policy.
E)  Stock prices tend to ignore expected changes in dividend payments.F) B) and D)
G) A) and D)

Exam 17: Short-Term Financial Planning and Management

Correct Answer
verified

Bell Weather Markets has recently sold for as little as $8 a share and as much as $15 a share.The difference between these two prices is referred to as the:

Correct Answer
verified
C

A small stock dividend is defined as a stock dividend of less than _____ percent.

Correct Answer
verified

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently, the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

Correct Answer
verified

The board of directors of Wilson Sporting Equipment met this afternoon and passed a resolution to pay a cash dividend of $0.42 a share next month.In relation to this dividend, today is referred to as which one of the following dates?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The Green Florist has 28,000 shares of stock outstanding with a par value of $1 per share and a market value of $7 a share.The company just announced a 2-for-5 reverse stock split.Currently, you own 300 shares of this stock.How many shares will you own after the reverse stock split?

Correct Answer
verified

Correct Answer
verified

Which one of the following is a result of a small stock dividend?

Correct Answer
verified
E

Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share.The firm just announced a 4-for-3 stock split.How many shares of stock will be outstanding after the split?

Correct Answer
verified

A stock repurchase program:

Correct Answer
verified

Explain the meaning of the dividend clientele effect and why it is important.

A reverse stock split is defined as:

Correct Answer
verified

Cooper Brands, Inc., has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Correct Answer
verified

Correct Answer
verified

Which one of the following is a direct result of a 2-for-1 stock split?

Correct Answer
verified

Which one of the following refers to the ability of shareholders to undo a firm's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock?

Correct Answer
verified

Taylor's Tools declared a $0.48 per share dividend on Friday, March 7.The dividend will be paid on Monday, April 7.The ex-dividend date is Tuesday, March 18.What is the record date?

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
verified

Exam 17: Short-Term Financial Planning and Management

Correct AnswerverifiedShow Answer

Bell Weather Markets has recently sold for as little as $8 a share and as much as $15 a share.The difference between these two prices is referred to as the:

Correct AnswerverifiedC

A small stock dividend is defined as a stock dividend of less than _____ percent.

Correct AnswerverifiedShow Answer

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently, the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

Correct AnswerverifiedShow Answer

The board of directors of Wilson Sporting Equipment met this afternoon and passed a resolution to pay a cash dividend of $0.42 a share next month.In relation to this dividend, today is referred to as which one of the following dates?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Green Florist has 28,000 shares of stock outstanding with a par value of $1 per share and a market value of $7 a share.The company just announced a 2-for-5 reverse stock split.Currently, you own 300 shares of this stock.How many shares will you own after the reverse stock split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is a result of a small stock dividend?

Correct AnswerverifiedE

Della's Pool Halls has 12,000 shares of stock outstanding with a par value of $1 per share and a market price of $39 a share.The firm just announced a 4-for-3 stock split.How many shares of stock will be outstanding after the split?

Correct AnswerverifiedShow Answer

A stock repurchase program:

Correct AnswerverifiedShow Answer

Explain the meaning of the dividend clientele effect and why it is important.

A reverse stock split is defined as:

Correct AnswerverifiedShow Answer

Cooper Brands, Inc., has 68,000 shares of stock outstanding at a market price of $63 a share.The par value is $1 per share.The company has just announced a 5-for-4 stock split.What will the market price per share be after the split?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is a direct result of a 2-for-1 stock split?

Correct AnswerverifiedShow Answer

Which one of the following refers to the ability of shareholders to undo a firm's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock?

Correct AnswerverifiedShow Answer

Taylor's Tools declared a $0.48 per share dividend on Friday, March 7.The dividend will be paid on Monday, April 7.The ex-dividend date is Tuesday, March 18.What is the record date?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
E

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified