Deck 14: Dividends and Dividend Policy

Question 1

Kelsey International declared a dividend on Friday, November 13, that is payable on Friday, December 4, 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

Answer 1

Wednesday, November 25

Question 2

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

Answer 2

Declaration date

Question 3

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

Answer 3

Distribution

Question 4

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 three percent.
D) The Dried Florist is preparing to pay its first annual dividend of $0.08 per share.
E) Hi Tek had an extraordinarily profitable year and has decided to do a one-time only $10 per share cash dividend.

Question 5

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 6

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 7

Lester's 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 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 $0.40 per share?

A) Special dividend of $0.40 per share
B) Extra cash dividend of $0.40 per share
C) Liquidating dividend of $0.40 per share
D) Increase the regular dividend by $0.11 and pay a special dividend of $0.29
E) Increase the regular dividend by $0.11 and pay an extra cash dividend of $0.29

Question 8

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 9

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 10

This morning, Lambert Materials bought 10,000 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 11

Which one of the following reduces the number of shares outstanding but does not change a firm's total equity?

A) Stock split
B) Distribution
C) Reverse split
D) Liquidation
E) Redemption

Question 12

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

Question 13

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 14

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 15

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

Question 16

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 17

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

Question 18

Which one of the following increases the number of shares outstanding but does not increase the value of owner's equity?

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

Question 19

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

Question 20

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 21

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 ratio
E) Market value of equity per share

Question 22

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 2003, individual investors pay a 15 percent tax on both dividends and capital gains.

Question 23

Which of the following are means by which a firm can reduce its number of outstanding shares? I. open market purchase
II) rights offer
III) tender offer
IV) targeted repurchase

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

Question 24

Which one of the following factors 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 25

Chelsie Enterprises 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?

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

Question 26

What percent 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 27

Phil is reviewing ABC Company's dividend policy as it relates to the firm's shareholders. As part of this review, he wants to divide shareholders into two basic categories in respect to dividend payments. The first group will be shareholders who are taxed on dividend income and the second group will be shareholders who receive some form of tax break on dividend income. Which of the following types of shareholders should be placed in the tax-favored second group? I. corporate
II) pension fund
III) individuals
IV) trust funds

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

Question 28

Which two of the following tend to limit the amount of dividends that can be paid by a leveraged corporation? I. current tax laws
II) corporate tax exclusion
III) bond indenture covenant
IV) state laws pertaining to retained earnings

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

Question 29

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 30

Which one of the following will result from a stock repurchase?

A) Increase in the number of shares outstanding
B) Decrease in the earnings per share
C) Decrease in the market price per share
D) Increase in the market value of equity per share
E) Decrease in the P/E ratio

Question 31

Which one of the following is an argument that dividend policy is irrelevant?

A) Flotation costs as they apply to equities.
B) Tax laws as they currently exist.
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 32

Assume that clienteles exist. Given this assumption, which one of the following 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 is currently 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 33

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 34

Joseph Turner and Sons has 125,000 shares of stock outstanding. The firm has extra cash so it announced this morning that it is willing to repurchase 25,000 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 35

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 36

Twelve days ago, DOG, Inc. 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 DOG, Inc.'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 37

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 38

Martin & Martin, Inc. stock is currently selling for $19 per share. The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $25 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 39

As of 2003, the maximum tax rate on long-term capital gains for high-income individuals was which one of the following rates?

A) 10 percent
B) 15 percent
C) 20 percent
D) 35 percent
E) 39 percent

Question 40

Elkins Feed Lot is an all-equity firm with positive net income. Which one of the following will result if the firm pays a cash dividend?

A) Number of shares outstanding will increase
B) Earnings per share will decrease
C) Total assets will remain constant
D) Price-earnings ratio will decrease
E) Total equity will increase

Question 41

As compared to a cash dividend, a share repurchase will do which of the following?

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 42

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 43

The common stock of Patee International goes ex-dividend tomorrow. The stock closed at a price of $33.60 a share today. This quarter, the company is paying a cash dividend of $0.24 a share and a liquidating dividend of $0.60 a share. Ignoring taxes and assuming that all else is held constant, what will the ex-dividend price be tomorrow morning?

A) $32.76
B) $33.00
C) $33.36
D) $33.96
E) $34.23

Question 44

Cash dividends send which two of the following signals to the market? I. agency costs will be lowered since less cash will be held by the firm
II) the firm is planning on downsizing
III) the firm is currently, and expects to continue to be, profitable
IV) the firm will no longer conduct stock repurchases

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

Question 45

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 currently paid by the vast majority of firms.
C) Managers tend to smooth dividends.
D) Stock prices tend to increase whenever anticipated changes in dividends occur.
E) Firms commence paying dividends prior to doing any stock repurchases.

Question 46

The common stock of Gallaghan's closed at $36.80 a share today. Tomorrow morning, the stock goes ex-dividend. The dividend that is being paid this quarter is $1.40 a share. The tax rate on dividends is 15 percent. All else equal, what should the opening stock price be tomorrow morning?

A) $35.19
B) $35.40
C) $35.52
D) $35.61
E) $35.70

Question 47

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 48

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

A) Firms may have to forego positive net present value projects.
B) Stock prices tend to increase as annual dividend amounts increase.
C) Cash dividends support stock prices.
D) Dividends are felt to be directly related to agency costs.
E) Dividend-paying firms tend to attract a wider field of investors than do non-dividend-paying firms.

Question 49

Which one of the following statements is correct concerning dividends in the U.S.?

A) The total amount of dividends paid by the S&P 500 companies has increased steadily every year since 1985.
B) Only financial sector firms decreased dividends in 2008.
C) Dividend amounts tend to react quickly to changes in the economy.
D) Firms tend to quickly adjust their dividends to changes in the firm's earnings per share.
E) There are less than 75 companies in the U.S. that have consistently increased their dividends for at least the past 25 years.

Question 50

Mercury 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 1/3
II) number of shares outstanding decreased by 1/4
III) price per share increased by 1/3
IV) price per share decreased by 1/4

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

Question 51

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 52

Which one of the following statements is correct?

A) Generally speaking, the size of a firm has no effect on its tendency to pay dividends.
B) The market crash and the accounting scandals in the early 2000's tended to cause financially- stable firms to cease paying cash dividends.
C) The majority of firms either started paying or increased their dividends per share in response to the May 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 53

Which one of these statements is correct?

A) Since the early 1980's, it has become increasingly more difficult to do a stock repurchase due to SEC regulations.
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) A fixed stock repurchase plan could be a negative net present value investment for the stock issuer.
E) Stock repurchases send the exact same signals to investors as do cash dividends.

Question 54

Westover Electric is preparing to pay its quarterly dividend of $2.20 a share this quarter. The stock closed at $57.70 a share today. What will the ex-dividend stock price be if the relevant tax rate is 10 percent and all else is held constant?

A) $55.28
B) $55.50
C) $55.72
D) $55.94
E) $55.99

Question 55

Which of the following are factors that help explain why the percentage of U.S. industrial firms paying dividends has increased since the early 2000s? I. decrease in the number of non-dividend paying firms
II) maturing of young, successful firms
III) signaling of a firm's financial health
IV) May 2003 tax act

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

Question 56

Which one of the following statements related to stock buybacks is correct?

A) Stock buybacks are a means of obtaining shares for employee stock option grants.
B) Stock buybacks are becoming rare and may soon disappear totally.
C) In 2007 and 2008, U.S. companies issued more shares than they repurchased.
D) Firms are only permitted one large share repurchase program.
E) Share repurchases are limited to 10 percent of the firm's outstanding shares.

Question 57

Given the current tax laws, which one of the following statements is correct?

A) Both stock repurchases and cash dividends are treated equally for tax purposes for individual shareholders.
B) Stock repurchases give individual shareholders more control over their personal taxes than do cash dividends.
C) Cash dividends are preferable to stock repurchases from the individual shareholder point of view.
D) Stock repurchases offer more tax benefits to the issuer than do cash dividends.
E) Cash dividends offer more tax benefits than do stock repurchases for the issuer.

Question 58

Which one of the following tends to be the primary attitude of firms' towards their dividend policy?

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 costs associated with cutting dividends are perceived to be less than the costs of obtaining external financing.
D) Once a dividend is increased, it should not be decreased.
E) Dividend smoothing is talked about but is not really a factor that affects dividend decisions.

Question 59

Keyser Trucking just paid its annual regular cash dividend of $1.22 a share, along with a special dividend of $0.25 a share. The company follows a policy of increasing its dividend by 2 percent annually. Which one of the following is the best estimate of the firm's next annual dividend payment?

A) $1.22
B) $1.24
C) $1.49
D) $1.50
E) $1.54

Question 60

Harris Brothers just announced it will be paying an annual dividend of $0.85 a share plus an extra dividend of $0.30 a share this year. The company also announced that its regular dividend, which is all it anticipates paying after this year, will increase by 3.5 percent annually. What is the anticipated dividend per share next year?

A) $0.82
B) $0.85
C) $0.88
D) $1.15
E) $1.19

Question 61

Dorchester, Inc. has 7,500 shares of stock outstanding at a market price of $42 each and earnings per share of $1.80. The firm has decided to repurchase $63,000 worth of stock. What will the PE ratio be after the repurchase, all else held constant?

A) $1.30
B) $1.44
C) $1.80
D) $2.02
E) $2.25

Question 62

Plato United has 17,000 shares of stock outstanding at a price per share of $33. How many shares will be outstanding if the firm does a 5-for-4 stock split?

A) 13,600 shares
B) 15,800 shares
C) 17,000 shares
D) 19,600 shares
E) 21,250 shares

Question 63

Southern Foods recently liquidated its fast food division. That unit represented 20 percent of the firm's overall market value. Prior to the liquidation, the firm's stock was selling for $43 a share, the annual dividend was steady at $1.20 per share, and there were 16,000 shares outstanding. The firm is preparing to distribute the entire liquidation proceeds to shareholders. How much will the liquidating dividend be per share?

A) $0.24
B) $0.36
C) $6.10
D) $7.40
E) $8.60

Question 64

Theodore's has common stock outstanding at a price of $26 a share. The total market value of the equity is $429,000. How many shares of stock will be outstanding if the firm does a 2-for-5 reverse stock split?

A) 41,250 shares
B) 36,000 shares
C) 6,600 shares
D) 7,500 shares
E) 16,500 shares

Question 65

Zacariah's Nursery has 6,000 shares of stock outstanding at a market price of $20 a share. The earnings per share are $1.54. The firm has total assets of $315,000 and total liabilities of $186,000. Today, the firm is paying an annual cash dividend of $0.80 a share. Ignore taxes. What will the earnings per share be after the dividend is paid?

A) $0.31
B) $0.74
C) $1.54
D) $20.70
E) $21.02

Question 66

Cookies and More has 8,000 shares of stock outstanding at a market price of $13.60 per share. What will the price per share be after the firm declares a 10 percent stock dividend? Ignore taxes and market imperfections.

A) $12.24
B) $12.36
C) $13.60
D) $14.96
E) $15.00

Question 67

Taylor's, Inc. stock has plummeted in value and is currently priced at $4 a share. The exchange on which the stock trades requires that the minimum stock price be $10 a share. Taylor's has decided to do a reverse stock split to avoid delisting. However, when it does this, the firm wants the stock price increased to at least twice the minimum exchange required price. Which one of the following stock split ratios is most appropriate for this situation?

A) 1-for-3
B) 1-for-5
C) 2-for-9
D) 3-for-1
E) 5-for-1

Question 68

Jerri currently owns 200 shares of Alpha stock. Each share is currently worth $36. What will Jerri's investment in Alpha be worth if the company declares a 4-for-3 stock dividend?

A) $5,400
B) $7,200
C) $9,000
D) $21,600
E) $28,800

Question 69

Global Traders has common stock outstanding at a market price of $53 per share. The total market value of the firm is $6,603,800. The firm plans on liquidating one of its divisions for $548,000 in cash 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) $4.197
B) $4.398
C) $4.620
D) $4.714
E) $4.782

Question 70

Gloria's Boutique has 4,000 shares of stock outstanding at a price per share of $19. What will the price per share be if the firm pays a $1.20 per share dividend? Ignore taxes and market imperfections.

A) $17.80
B) $18.40
C) $18.80
D) $19.00
E) $20.20

Question 71

Stellar Technologies has 48,000 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 $20 a share? Ignore any taxes or market imperfections.

A) 10-for-3 stock split
B) 3-for-1 stock split
C) 1-for-3-reverse stock split
D) 2-for-7 reverse stock split
E) 3-for-10 reverse stock split

Question 72

Aaron's Nursery has 6,000 shares of stock outstanding at a market price of $20 a share. The earnings per share are $1.54. The firm has total assets of $315,000 and total liabilities of $186,000. Today, the firm is repurchasing $4,800 worth of stock. Ignore taxes. What will the earnings per share be after the stock repurchase?

A) $1.283
B) $1.232
C) $1.540
D) $1.604
E) $1.848

Question 73

Martha's Baked Goods has 15,000 shares of stock outstanding at a market price of $24.10 per share. What will the price per share be after the firm declares a 5 percent stock dividend? Ignore taxes and market imperfections.

A) $22.90
B) $22.95
C) $24.10
D) $25.31
E) $25.40

Question 74

Lester's Meat Market has 7,000 shares of stock outstanding at a price per share of $11. What will the price per share be if the firm declares a 3-for-5 reverse stock split?

A) $6.60
B) $7.50
C) $11.00
D) $15.00
E) $18.33

Question 75

Neal Fabricators just liquidated its poorest performing division and realized net proceeds from the transaction of $2.6 million. The firm has 180,000 shares of stock outstanding at a market price of $64 a share. Which one of the following is the best estimate of the stock's post-dividend price per share if the firm distributes the entire liquidation proceeds in the form of a liquidating dividend? Ignore taxes and market imperfections.

A) $49.56
B) $51.38
C) $53.40
D) $58.79
E) $64.00

Question 76

Heidi owns 400 shares of Boyd Enterprises stock, which is valued at $17 a share. Boyd Enterprises just declared a 10 percent stock dividend. How many shares will Heidi own and what will the price per share be after the dividend?

A) 360; $15.45
B) 360; $18.70
C) 440; $15.45
D) 440; $17.00
E) 440; $18.70

Question 77

Mueller Brothers has 38,000 shares of stock outstanding at a price per share of $59. How many shares will be outstanding if the firm does a 3-for-2 stock split?

A) 24,000 shares
B) 25,333 shares
C) 55,667 shares
D) 57,000 shares
E) 61,000 shares

Question 78

Lester's has a market value balance sheet as shown below. The firm currently has 7,500 shares of stock outstanding at a price per share of $40. Net income is $9,500. The firm has decided to repurchase $20,000 worth of its outstanding stock. What will the firm's PE ratio be after this repurchase, all else held constant?

A) 23.39
B) 28.76
C) 29.47
D) 30.13
E) 32.16

Question 79

Haywood and More have a market value balance sheet as shown below. The firm currently has 5,000 shares of stock outstanding at a market price per share of $35.40. Net income is $9,500. The firm has decided to spend $8,000 and 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) 18.63
D) 21.22
E) 24.50

Question 80

Gloria's Boutique has 4,000 shares of stock outstanding at a price per share of $19. 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) $17.80
B) $18.40
C) $18.80
D) $19.00
E) $20.20