Deck 14: Dividends and Dividend Policy

Question 1

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)Kate's 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)Kurt's Music is planning to increase its quarterly dividend by 3 percent.
D)The Dried Florist is preparing to pay its first annual dividend of $.08 per share.
E)Hi Tek had an extraordinarily profitable year and has decided to do a one-time only $10 per share cash dividend.

Answer 1

Valley Feed Mills recently sold its grain storage facility and is distributing the proceeds of that sale to its shareholders.

Question 2

Tuesday, December 1, is the ex-dividend date for Alpha stock.Which one of the following dates is the record date? Assume there are no banking holidays to consider.

A)Friday, November 27
B)Monday, November 30
C)Wednesday, December 2
D)Thursday, December 3
E)Friday, December 4

Answer 2

Thursday, December 3

Question 3

Miller's Hardware recently paid $1.21 per share in dividends.The company currently has excess cash and would like to distribute an additional $.35 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 a similar increase in the future and doesn't want to lower the dividend once it has been raised.Which one of the following is probably the best suggestion for distributing the $.35 per share?

A)Pay a special dividend of $.35 per share
B)Pay an extra cash dividend of $.35 per share
C)Pay a liquidating dividend of $.35 per share
D)Increase the regular dividend by $.12 and pay a special dividend of $.23
E)Increase the regular dividend by $.12 and pay an extra cash dividend of $23

Answer 3

Pay a special dividend of $.35 per share

Question 4

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 values
B)Price splits
C)Price dividers
D)Split range
E)Trading range

Question 5

Which one of the following increases the number of shares outstanding but does not change a firm's equity account values?

A)Reverse stock split
B)Cash distribution
C)Stock split
D)Liquidation dividend
E)Special dividend

Question 6

On which one of the following dates is the determination made as to which shareholders will receive a dividend payment?

A)Date of record
B)Ex-dividend date
C)Payment date
D)Declaration date
E)Public announcement date

Question 7

On which one of the following dates are dividend checks mailed?

A)Date of record
B)Ex-dividend date
C)Payment date
D)Declaration date
E)Public announcement date

Question 8

Which one of the following events must occur before a firm can offer a liquidating dividend?

A)Bankruptcy filing
B)Insolvency declaration
C)Asset sale
D)Negative equity
E)Failed bond issue

Question 9

Which one of the following dates is the date on which the board of directors votes to pay a dividend?

A)Record date
B)Declaration date
C)Ex-dividend date
D)Payment date
E)Settlement date

Question 10

Which one of the following best defines a regular cash dividend?

A)Distribution by a firm to its shareholders
B)Payment from any source by a firm to its owners
C)One-time payment of cash by a firm to its shareholders
D)Cash payment by a firm to its owners as part of a firm's normal operations
E)Distribution of the proceeds from the sale of a portion of a firm's operations

Question 11

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 levels
B)Risk level
C)Short-term versus long-term investments
D)Rates of return
E)Dividends

Question 12

The ex-dividend date is defined as _____ day(s) before the date of record.

A)three business
B)three
C)two business
D)two
E)one

Question 13

KL Electronics has paid a quarterly dividend of $.42 per share for the past two years.This quarter, the firm plans to pay $.42 plus an additional $.05 per share.The firm has stated that it is uncertain whether it will pay $.42 or $.47 per share next quarter.Which one of the following is the best description of the additional $.05 that is being paid this quarter?

A)Liquidating dividend
B)Special dividend
C)Extra dividend
D)Stock dividend
E)Normal dividend

Question 14

Kelsey International declared a dividend on Friday, November 13, that is payable on Friday, December 11, to holders of record on Monday, November 30.What is the latest date that you can purchase this stock if you wish to receive this dividend? Assume there are no banking holidays within this period of time.

A)Tuesday, November 24
B)Wednesday, November 25
C)Thursday, November 26
D)Friday, November 27
E)Monday, November 30

Question 15

This morning, Structural Steel purchased 3,500 of its outstanding shares in the open market.What type of transaction was this?

A)Stock payout
B)Stock distribution
C)Stock dividend
D)Stock repurchase
E)Stock reversal

Question 16

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 record
B)Ex-dividend date
C)Payment date
D)Declaration date
E)Public announcement date

Question 17

Which of these is a noncash payment made by a firm to its shareholders that lessens the value of each outstanding share?

A)Reverse stock split
B)Cash distribution
C)Stock dividend
D)Regular dividend
E)Liquidating dividend

Question 18

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)Interest
B)Distribution
C)Retained earnings
D)Dividend
E)Stock repurchase

Question 19

Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm's shareholders?

A)Interest
B)Capital surplus
C)Retained earnings
D)Dividend
E)Stock repurchase

Question 20

Which one of the following reduces the number of shares outstanding but does not decrease the value of owners' equity?

A)Stock repurchase
B)Stock split
C)Reverse stock split
D)Cash distribution
E)Liquidating dividend

Question 21

A stock repurchase will:

A)increase the number of shares outstanding.
B)decrease the earnings per share.
C)decrease the market price per share.
D)increase the market value per share.
E)decrease the PE ratio.

Question 22

A share repurchase will:

A)increase both earnings per share and the PE ratio.
B)increase the earnings per share but not affect the PE ratio.
C)increase the earnings per share and decrease the PE ratio.
D)not affect either the earnings per share nor the PE ratio.
E)not affect the earnings per share but will decrease the PE ratio.

Question 23

Which one of the following would tend to favor a low-dividend payout?

A)Higher tax rates on capital gains than on dividend income
B)High flotation cost for equity issues
C)Endowment fund investors who cannot spend principal
D)Investors' desire for a high-dividend yield
E)Elimination of the tax deferral on capital gains

Question 24

Which one of the following is least apt to limit the amount of cash dividends a firm can pay?

A)Lack of retained earnings
B)A bankruptcy proceeding
C)A bond indenture covenant
D)State laws
E)Increasing stock price

Question 25

The argument that dividend policy is irrelevant tends to be supported by which one of these factors?

A)Flotation costs associated with equity issues
B)Current tax laws
C)An unsatisfied demand for high-dividend-paying stocks
D)Current equilibrium in the clientele dividend market
E)The current tax exclusion available to corporate investors

Question 26

JTL has 148,000 shares of stock outstanding.The firm has extra cash so it announced this morning that it is willing to repurchase 18,000 of its shares.What type of offer is the firm making?

A)Rights offer
B)Secondary issue
C)Targeted repurchase
D)Tender offer
E)Private issue

Question 27

Which one of these favors a high-dividend payout?

A)Low transaction costs on stock trades
B)Lower taxes on capital gains than on dividends
C)Tax deferment on capital gains, but not on dividend income
D)Flotation costs
E)Corporate shareholders

Question 28

Assume an all-equity firm has positive net income.If this firm pays a cash dividend the:

A)number of shares outstanding will increase.
B)earnings per share will decrease.
C)firm's total assets will remain constant.
D)price-earnings ratio will decrease.
E)firm's total equity will increase.

Question 29

Which one of the following statements is correct concerning the taxation of dividends and capital gains?

A)Seventy percent of capital gains derived from stock investments are tax exempt for corporate investors.
B)Dividends are a form of tax-exempt income for individual investors.
C)All investors are subject to the same tax rate on dividend income.
D)Individual investors can defer taxation on both dividends and capital gains.
E)As of 2015, individual investors pay a tax rate that varies from 0 to 15 percent on dividend income.

Question 30

All of the following investors generally receive a tax break on dividend income with the exception of:

A)corporate shareholders.
B)pension funds.
C)trust funds.
D)endowment funds.
E)individuals.

Question 31

Assume that satisfied clienteles exist.Given this assumption, which one of these statements is correct?

A)A firm can increase its share price by increasing its dividend payout.
B)Dividend policy is irrelevant as long as each clientele group remains satisfied.
C)All firms will adopt a high-dividend-payout policy.
D)All dividends become irrelevant.
E)All firms should adopt a low-dividend-payout policy.

Question 32

Davis Engineering declared a dividend to shareholders of record on Monday, February 8, that is payable on Friday, February 26.Carla knows that her dividend check normally arrives three business days after the check is written.On which one of the following days should she expect to receive her dividend check? Assume a 365-day year.

A)Wednesday, February 10
B)Thursday, February 11
C)Monday, March 1
D)Tuesday, March 2
E)Wednesday, March 3

Question 33

Which one of the following statements is correct?

A)Dividends are irrelevant.
B)Flotation costs are a good reason to support a high-dividend payout.
C)Current tax laws favor high current dividends for individual investors.
D)Dividend policy is the time pattern of dividend payout.
E)Corporate investors tend to prefer low-dividend payouts on securities they own.

Question 34

Two weeks ago, Jensen's declared a dividend of $1.34 a share.The ex-dividend date is tomorrow.All else constant, which one of the following is the best estimate of Jensen's opening stock price tomorrow?

A)$1.34 lower than today's closing price
B)Today's closing price minus an amount approximately equal to the aftertax value of the dividend
C)The same as today's closing price since the dividend is expected
D)$1.34 higher than today's closing price
E)Today's closing price plus an amount approximately equal to the aftertax value of the dividend

Question 35

What percentage of capital gains are excluded from taxation for corporate shareholders?

A)0 percent
B)10 percent
C)25 percent
D)70 percent
E)75 percent

Question 36

Assume there are no taxes or imperfections.Given this assumption, which one of the following statements is correct?

A)A cash dividend has no effect on the market price of the payer's stock.
B)A cash dividend decreases shareholder wealth.
C)Stock repurchases decrease the market value per share.
D)Both a cash dividend and a share repurchase increase a firm's PE ratio.
E)A stock repurchase has the same effect on a firm's market value balance sheet as does a cash dividend.

Question 37

Davidson Interiors declared a dividend to holders of record on Thursday, October 15, that is payable on Monday, November 2.Suenette purchased 200 shares of Davidson Interiors stock on Monday, October 12, and Jake purchased 100 shares of this stock on the following day.Which one of the following statements is correct given this information?

A)Both Suenette and Jake will receive this dividend.
B)Suenette will receive the dividend but Jake will not.
C)Jake will receive the dividend but Suenette will not.
D)Neither Suenette nor Jake will receive this dividend.
E)You cannot determine who will or will not receive this dividend based on the information provided.

Question 38

All of the following are means of reducing the number of outstanding shares with the exception of a(n):

A)open market purchase.
B)reverse stock split.
C)tender offer.
D)rights offer.
E)targeted repurchase.

Question 39

M&N stock is currently selling for $22 per share.The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $26 per share.What type of offer is being made?

A)Rights offer
B)Secondary issue
C)Targeted repurchase
D)Tender offer
E)Private issue

Question 40

Kelso's is considering spending $80,000 on either a stock repurchase or an extra cash dividend.Which one of the following values will be the same whether the firm pays a dividend or repurchases stock? Assume there are no taxes or market imperfections.

A)Number of shares outstanding
B)Price per share
C)Earnings per share
D)Price-earnings (PE) ratio
E)Market value of equity per share

Question 41

Which statement is correct?

A)Stock dividends tend to reduce agency costs related to shareholders but stock repurchases do not.
B)It is relatively easy to determine whether or not a firm has completed a planned stock repurchase.
C)Fixed stock repurchases allow managers to repurchase shares only when they feel those shares are undervalued.
D)Stock dividends may come at the expense of forgoing positive net present value projects.
E)Stock repurchases send the exact same signals to investors as cash dividends send.

Question 42

Lexington Stables just declared a 15 percent stock dividend.Which one of the following increased by 15 percent as a result of this dividend?

A)Book value of firm's equity
B)Shareholders' wealth
C)Number of shares outstanding
D)Firm's cash balance
E)Stock price

Question 43

Dragon Trucking just paid its annual regular cash dividend of $1.08 a share, along with a special dividend of $.12 a share.The company follows a policy of increasing its dividend by 1 percent annually.Which one of the following is the best estimate of the firm's next annual dividend payment?

A)$1.1925
B)$1.0908
C)$1.2120
D)$1.0912
E)$1.1032

Question 44

The common stock of Woods Bowling Balls closed at $59.65 a share today.Tomorrow morning, the stock goes ex-dividend.The dividend that is being paid this quarter is $1.37 per share.Assume the tax rate on dividends is 21 percent.All else equal, what should the opening stock price be tomorrow morning?

A)$59.64
B)$58.43
C)$58.38
D)$58.57
E)$58.72

Question 45

Most company managers overwhelming feel that:

A)dividends should be increased annually no matter what.
B)dividends should be flexible and adjusted annually in response to changes in the firm's earnings.
C)the personal taxes of their shareholders must be their primary consideration when setting dividend policy.
D)once a dividend is increased, it should not be decreased.
E)dividend smoothing is talked about but rarely affects dividend decisions.

Question 46

The common stock of Beasley International goes ex-dividend tomorrow.The stock closed at a price of $28.06 a share today.This quarter, the company is paying a cash dividend of $.17 a share and a liquidating dividend of $.23 a share.Assuming the tax rate on dividends is 20 percent, what will be the ex-dividend price tomorrow morning?

A)$27.74
B)$27.68
C)$27.94
D)$33.96
E)$27.66

Question 47

Which one of the following is a drawback of cash dividends?

A)Firms may have to obtain additional external financing which would not be required in the absence of the dividends.
B)Stock prices tend to increase as annual dividend amounts increase.
C)Cash dividends support stock prices.
D)Dividends tend to lower agency costs.
E)Dividend-paying firms tend to attract a wider field of investors than do non-dividend-paying firms.

Question 48

Modern Homes just declared a 4-for-3 stock split.Which of the following occurred as a result of this split?
I.Number of shares outstanding increased by one-third
II.Number of shares outstanding decreased by one-fourth
III.Price per share increased by one-third
IV.Price per share decreased by one-fourth

A)I only
B)I and III only
C)I and IV only
D)II and III only
E)II and IV only

Question 49

Fried Foods recently liquidated its fast-food division.That unit represented 30 percent of the firm's overall market value.Prior to the liquidation, the firm's stock was selling for $46 a share, the annual dividend was steady at $1.20 per share, and there were 18,000 shares outstanding.The firm is preparing to distribute the entire liquidation proceeds to shareholders.How much should shareholders expect to receive per share from this liquidating dividend? Ignore taxes.

A)$14.24
B)$13.30
C)$14.10
D)$13.10
E)$13.80

Question 50

Cosmetics Emporium is preparing to pay its quarterly dividend of $1.76 a share.The stock closed at $79.65 a share today and goes ex-dividend tomorrow.What will the ex-dividend stock price be if the relevant tax rate is 21 percent and all else is held constant?

A)$78.99
B)$78.91
C)$78.26
D)$78.04
E)$77.99

Question 51

In the US, stock dividends:

A)tend to change in direct proportion to changes in earnings.
B)have steadily declined in nominal terms over the years.
C)tend to decrease in amount just as frequently as they increase.
D)are concentrated in a few mature firms.
E)have steadily declined in real terms over the years.

Question 52

Research conducted on firms' dividend policies over time support which one of the following conclusions?

A)Aggregate dividends and stock repurchases have steadily declined in real terms.
B)Dividends are required to be paid by all public corporations in existence for ten years or more.
C)Managers tend to smooth dividends.
D)Stock prices react quickly whenever an anticipated dividend amount is paid.
E)Firms generally commence paying dividends prior to doing any stock repurchases.

Question 53

Which statement is correct regarding US companies?

A)The personal taxes of investors is the key factor managers consider when establishing a dividend policy.
B)Firms tend to increase their regular dividend as soon as they expect increased earnings in the future.
C)Firms tend to react quickly to lower dividends any time the economy begins to slow.
D)Firms tend to quickly adjust their dividends to changes in the firm's P/E ratio.
E)Procter & Gamble is one example of a firm with a long history of increasing dividends.

Question 54

Dunder Imports has common stock outstanding at a market price of $57 per share.The total market value of the firm is $5,130,000.The firm plans on liquidating one of its divisions for $500,000 in cash, after taxes, and distributing the proceeds to the shareholders in the form of a liquidating dividend.What will be the amount per share of that dividend?

A)$5.794
B)$5.556
C)$5.220
D)$5.308
E)$5.382

Question 55

Which statement is correct?

A)Cash dividends and stock repurchases are treated equally for tax purposes.
B)In total dollars, cash dividends outweighed stock repurchases for the period 2003-2013.
C)Many firms either ceased paying or decreased their dividends per share in response to the 2003 change in dividend taxation.
D)Firms tend to prefer cash dividends over share repurchases for their flexibility and tax benefits.
E)A non-dividend-paying firm is more apt to do a stock repurchase than to commence paying dividends.

Question 56

Which statement is correct?

A)Tax rates are the key determinant to a company's dividend policy.
B)Firms are equally likely to increase or decrease their normal dividends per share.
C)Dividends tend to be more erratic than earnings.
D)Mature firms are less apt to pay dividends than young firms.
E)Dividend growth tends to lag earnings growth.

Question 57

Which one of the following is basically equivalent to a 2-for-1 stock split?

A)20 percent stock dividend
B)25 percent stock dividend
C)50 percent stock dividend
D)100 percent stock dividend
E)200 percent stock dividend

Question 58

Of the following, which two are the best reasons for doing a reverse stock split?
I.Return a stock to its normal trading range
II.Eliminate small shareholders
III.Reduce shareholder costs
IV.Avoid delisting

A)I and II
B)I and III
C)II and III
D)II and IV
E)III and IV

Question 59

Normal cash dividends that are increased regularly tend to send which message?

A)The firm is attempting to reduce its tax bill.
B)The dividends are expected to increase the firm's agency costs.
C)The firm is planning on downsizing.
D)The firm is discontinuing all stock repurchases.
E)The firm expects to be profitable.

Question 60

Overboard Excursions just announced it will be paying an annual dividend of $1.37 a share plus an extra dividend of $.56 a share this year.The company also announced that its regular dividend, which is all it anticipates paying after this year, will increase by 1.5 percent annually.What is the anticipated dividend per share next year?

A)$1.3855
B)$1.3924
C)$1.3906
D)$1.8088
E)$1.3745

Question 61

Pluto United has 14,200 shares of stock outstanding at a price per share of $23.How many shares will be outstanding if the firm does a 4-for-3 stock split?

A)18,300 shares
B)19,033 shares
C)18,667 shares
D)19,100 shares
E)18,933 shares

Question 62

Dixie's has a market value balance sheet as shown below.The firm currently has 2,200 shares of stock outstanding and net income of $10,500. The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend.What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.

A)14.20
B)16.67
C)13.08
D)11.22
E)14.57

Question 63

Metal Fabricators recently sold its poorest performing division and realized net proceeds from the transaction of $1.63 million.The firm has 320,000 shares of stock outstanding and a market price of $49 a share.The firm is now preparing to distribute the entire sale proceeds in the form of a liquidating dividend.What is the best estimate of the ex-dividend stock price? Ignore taxes and market imperfections.

A)$43.91
B)$41.38
C)$44.40
D)$43.79
E)$44.14

Question 64

Your portfolio is 500 shares of Country Marine Parts that currently sells for $33 a share.The company has announced a cash dividend of $0.75 per share with an ex-dividend date of tomorrow.Assume there are no taxes.What should you expect your portfolio value to be tomorrow morning assuming all else is held constant?

A)$16,236
B)$16,500
C)$16,646
D)$16,764
E)$16,830

Question 65

Fresh Baked Goods has 36,800 shares of stock outstanding at a market price of $24.91per share.What will be the price per share after a stock dividend of 6 percent? Ignore taxes and market imperfections.

A)$24.90
B)$23.50
C)$25.00
D)$25.31
E)$25.40

Question 66

Kaylor's Tool Shoppe has 8,600 shares of stock outstanding at a market price of $8 a share.Which one of the following stock splits should the firm declare if it wants to increase the stock price to exactly $36a share? Ignore any taxes or market imperfections.

A)3-for-4 stock split
B)2-for-11 stock split
C)2-for-7 reverse stock split
D)2-for-9 reverse stock split
E)2-for-8 reverse stock split

Question 67

Botanical Gardens Nursery has 7,500 shares of stock outstanding at a market price of $18 a share.The earnings per share are $1.23.The firm has total assets of $384,000 and total liabilities of $146,000.Today, the firm is paying a quarterly cash dividend of $.22 a share.What will be the earnings per share after the dividend is paid if the tax rate on dividends is 15 percent?

A)$1.01
B)$1.04
C)$1.23
D)$1.17
E)$1.20

Question 68

Taylor's stock has plummeted in value and is currently priced at $5 a share.The firm prefers the price exceed $10 a share and thus has decided to do a reverse stock split.However, when it does this, the firm wants the stock price increased to at least twice its preferred minimum as it is concerned the price will fall further.Which one of the following stock split ratios is most appropriate for this situation?

A)1-for-3
B)1-for-4
C)2-for-7
D)4-for-1
E)7-for-2

Question 69

Innovative Technologies has 46,000 shares of stock outstanding at a market price of $6 a share.Which one of the following stock splits should the firm declare if it wants to increase the stock price to exactly $16 a share? Ignore any taxes or market imperfections.

A)5-for-2 stock split
B)3-for-1 stock split
C)1-for-3-reverse stock split
D)2-for-5 reverse stock split
E)3-for-8 reverse stock split

Question 70

Bob's Standard Station has 15,000 shares of stock outstanding at a market price of $15 a share.The current earnings per share are $1.26.The firm has total assets of $312,000 and total liabilities of $97,500.Next week, the firm will be repurchasing $37,500 worth of stock.Ignore taxes.What will be the earnings per share after the stock repurchase?

A)$1.598
B)$1.547
C)$1.335
D)$1.512
E)$1.563

Question 71

The Meat Market has 16,000 shares of stock outstanding at a price per share of $7.What will be the price per share if the firm declares a 3-for-7 reverse stock split?

A)$11.80
B)$4.50
C)$3.00
D)$15.00
E)$16.33

Question 72

Heidi owns 400 shares of Boyd Enterprises stock, which is valued at $13 a share.Boyd Enterprises just declared a stock dividend of 4 percent.How many shares will Heidi own and what will be the price per share after the dividend?

A)385; $12.50
B)385; $13.00
C)416; $12.50
D)416; $13.00
E)416; $13.50

Question 73

Oak Tree Farms has common stock outstanding at a price of $13 a share.The total market value of the equity is $435,000.How many shares of stock will be outstanding if the firm does a reverse stock split of 2-for-5?

A)9,602 shares
B)36,000 shares
C)13,385 shares
D)37,500 shares
E)83,654 shares

Question 74

B&K Lumber has 50,600 shares of stock outstanding at a price per share of $68.How many shares will be outstanding if the firm does a 5-for-2stock split?

A)20,240 shares
B)22,300 shares
C)55,667 shares
D)126,500 shares
E)121,120 shares

Question 75

The Down Towner has a market value balance sheet as shown below.The firm currently has 12,000 shares of stock outstanding and net income of $17,500. The firm has decided to repurchase 10 percent of its outstanding stock at the current market price and fund that purchase with new debt.After the repurchase there will be ____ shares outstanding at a price per share of ____.

A)10,200; $11.50
B)10,200; $12.65
C)10,800; $12.65
D)10,800; $11.50
E)10,800; $14.05

Question 76

Jessica currently owns 500 shares of Alpha stock valued at $19 share.What will her investment in Alpha be worth if the company declares a 4-for-3 stock split?

A)$6,075
B)$9,500
C)$11,000
D)$7,125
E)$8,800

Question 77

Cookies and Cream has 5,000 shares of stock outstanding at a market price of $8.29 per share.What will be the price per share after a stock dividend of 8 percent? Ignore taxes and market imperfections.

A)$7.24
B)$7.68
C)$7.45
D)$7.96
E)$8.03

Question 78

Water Front Rentals has 20,000 shares of stock outstanding at a market price of $24 each and earnings per share of $1.84.The firm has decided to repurchase $75,000 worth of stock.What will the PE ratio be after the repurchase, all else held constant?

A)11.55
B)13.24
C)9.50
D)10.69
E)11.01

Question 79

Dress Boutique has 8,350 shares of stock outstanding at a price per share of $19.What will be the price per share if the firm pays a $.75 per share dividend and the applicable tax rate is 25 percent? Ignore market imperfections.

A)$18.44
B)$18.68
C)$18.25
D)$18.36
E)$18.49

Question 80

Davidson International has 13,700 shares of stock outstanding at a price per share of $28.The firm has decided to repurchase 500 of those shares in the open market.What will the price per share be after the share repurchase is completed? Ignore taxes and market imperfections.

A)$29.14
B)$28.84
C)$28.89
D)$28.00
E)$29.06