Question 1

Suppose a firm has a retention ratio of 35 percent,net income of $35 million,and 10 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

The answer of Suppose a firm has a retention ratio...

Question 2

Which of the following is an offer announced publicly that specifies in advance a single purchase price,the number of shares sought,and the duration of the offer?

Accepted Answer

A fixed-price tender offer specifies a single purchase price, the number of shares sought, and the duration of the offer. This offer is announced publicly, and shareholders can choose to sell their shares at the specified price within the given timeframe.

Question 3

Suppose a firm has a retention ratio of 80 percent,net income of $10 million,and 2 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

The dividend payout ratio is the opposite of the retention ratio. If the retention ratio is 80%, the dividend payout ratio is 20% (100% - 80%). With a net income of $10 million, the total dividends paid are 20% of $10 million, which is $2 million. Dividing this by the 2 million shares outstanding gives a dividend per share of $1.00.

Question 4

If a firm has retained earnings of $10 million,a common shares account of $15 million,and additional paid-in-capital of $5 million,how much would be transferred in (or out)of these accounts in response to a 50 percent stock dividend,respectively?

Accepted Answer

To calculate the transfer in (or out) of each account, we need to determine the value of the stock dividend. A 50 percent stock dividend means that shareholders will receive 0.5 shares for every share they currently own, effectively doubling the number of shares outstanding.

For retained earnings, the transfer out is equal to the total value of the dividend. With a $10 million balance, the transfer out would be $5 million.

For common shares, there is no transfer in or out, since the number of shares doubles but their value is halved. The $15 million balance remains the same.

For additional paid-in-capital, the transfer in is equal to the total value of the dividend. With a $5 million balance, the transfer in would be $2.5 million.

Therefore, the correct answer is C: -100 percent, +50 percent, +50 percent.

Question 5

Suppose a firm has a retention ratio of 35 percent and net income of $2 million.How much does it pay out in dividends?

Accepted Answer

Retained earnings = net income * retention ratio
Retained earnings = $2 million * 0.35 = $0.7 million
Dividends paid out = Net income - Retained earnings
Dividends paid out = $2 million - $0.7 million = $1.3 million

Question 6

Suppose a firm pays total dividends of $100,000 out of net income of $1 million.What would the firm's payout ratio be?

Accepted Answer

Payout ratio is calculated by dividing dividends by net income. Thus, the payout ratio in this scenario would be $100,000 / $1,000,000 = 0.10, or 10%. Therefore, the correct choice is B.

Question 7

Suppose a firm pays total dividends of $250,000 out of net income of $2 million.What would the firm's payout ratio be?

Accepted Answer

The payout ratio is calculated as the total dividends divided by the net income. So, $250,000 / $2,000,000 = 0.125 or 12.5%.

Question 8

Suppose a firm pays total dividends of $25,000 out of net income of $100,000.What would the firm's payout ratio be?

Accepted Answer

The payout ratio is calculated as the total dividends divided by the net income. Here, it is $25,000 / $100,000 = 0.25 or 25%.

Question 9

A pro-rata distribution of additional shares of stock to the current owners of the stock is which of the following?

Accepted Answer

A pro-rata distribution of additional shares of stock to current owners of the stock is a stock dividend. Stock split is a division of a company's existing shares into multiple shares to increase the liquidity of the shares, payment date is the date when a company distributes dividends to its shareholders, and ex-dividend is the date on or after which the buyer of a stock is not entitled to receive the next dividend payment.

Question 10

Suppose a firm pays total dividends of $50,000 out of net income of $500,000.What would the firm's payout ratio be?

Accepted Answer

The payout ratio is calculated as the total dividends divided by the net income, which is $50,000 / $500,000 = 0.10 or 10%.

Question 11

Suppose a firm has a retention ratio of 25 percent,net income of $30 million,and 5 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

The answer of Suppose a firm has a retention ratio...

Question 12

Suppose a firm has a retention ratio of 10 percent,net income of $40 million,and 4 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

The answer of Suppose a firm has a retention ratio...

Question 13

Suppose a firm has a retention ratio of 40 percent and net income of $10 million.How much does it pay out in dividends?

Accepted Answer

Retained earnings = 40% of $10 million = $4 million
Dividends paid = Net income - Retained earnings
Dividends paid = $10 million - $4 million = $6 million. Therefore, the answer is B.

Question 14

Suppose a firm pays total dividends of $200,000 out of net income of $2.5 million.What would the firm's payout ratio be?

Accepted Answer

The payout ratio is calculated by dividing the total dividends by the net income. So, $200,000 / $2,500,000 = 0.08 or 8%.

Question 15

Which of the following is described as a firm buying back shares of its own stock?

Accepted Answer

Repurchase or buyback refers to a firm buying back shares of its own stock. Ex-dividend refers to a stock trading without the dividend included, ex-stock purchase and repossession are not accurate descriptions of a firm buying back its own stock.

Question 16

Which of the following is an exchange of existing shares for a different (usually larger)number of "new shares," with proportionately different par and market values?

Accepted Answer

A stock split involves exchanging existing shares for a larger number of new shares, with a proportionate adjustment to par and market values. A stock dividend is the distribution of additional shares of stock to existing shareholders, without changing the total number of shares outstanding. Payment date and ex-dividend are related to the timing of dividend payments, not stock splits.

Question 17

If a firm has retained earnings of $40 million,a common shares account of $50 million,and additional paid-in-capital of $25 million,how much would be transferred in (or out)of these accounts in response to a 40 percent stock dividend,respectively?

Accepted Answer

The answer of If a firm has retained earnings of...

Question 18

Which of the following is a repurchase where the firm simply buys shares of its own stock on the stock market just like any other investor would?

Accepted Answer

An open-market stock repurchase is where the firm buys its own shares on the stock market just like any other investor would. The other choices refer to specific types of tender offers where the firm offers to repurchase a certain number or percentage of shares at a fixed price or for a fixed duration.

Question 19

Suppose a firm has a retention ratio of 25 percent,net income of $21 million,and 3 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

The answer of Suppose a firm has a retention ratio...

Question 20

Suppose a firm has a retention ratio of 15 percent,net income of $60 million,and 15 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Accepted Answer

The answer of Suppose a firm has a retention ratio...

Quiz 17: Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Suppose a firm has a retention ratio of 35 percent,net income of $35 million,and 10 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Which of the following is an offer announced publicly that specifies in advance a single purchase price,the number of shares sought,and the duration of the offer?

Suppose a firm has a retention ratio of 80 percent,net income of $10 million,and 2 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

If a firm has retained earnings of $10 million,a common shares account of $15 million,and additional paid-in-capital of $5 million,how much would be transferred in (or out) of these accounts in response to a 50 percent stock dividend,respectively?

Suppose a firm has a retention ratio of 35 percent and net income of $2 million.How much does it pay out in dividends?

Suppose a firm pays total dividends of $100,000 out of net income of $1 million.What would the firm's payout ratio be?

Suppose a firm pays total dividends of $250,000 out of net income of $2 million.What would the firm's payout ratio be?

Suppose a firm pays total dividends of $25,000 out of net income of $100,000.What would the firm's payout ratio be?

A pro-rata distribution of additional shares of stock to the current owners of the stock is which of the following?

Suppose a firm pays total dividends of $50,000 out of net income of $500,000.What would the firm's payout ratio be?

Suppose a firm has a retention ratio of 25 percent,net income of $30 million,and 5 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Suppose a firm has a retention ratio of 10 percent,net income of $40 million,and 4 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Suppose a firm has a retention ratio of 40 percent and net income of $10 million.How much does it pay out in dividends?

Suppose a firm pays total dividends of $200,000 out of net income of $2.5 million.What would the firm's payout ratio be?

Which of the following is described as a firm buying back shares of its own stock?

Which of the following is an exchange of existing shares for a different (usually larger) number of "new shares," with proportionately different par and market values?

If a firm has retained earnings of $40 million,a common shares account of $50 million,and additional paid-in-capital of $25 million,how much would be transferred in (or out) of these accounts in response to a 40 percent stock dividend,respectively?

Which of the following is a repurchase where the firm simply buys shares of its own stock on the stock market just like any other investor would?

Suppose a firm has a retention ratio of 25 percent,net income of $21 million,and 3 million shares outstanding.What would be the dividend per share paid out on the firm's stock?

Suppose a firm has a retention ratio of 15 percent,net income of $60 million,and 15 million shares outstanding.What would be the dividend per share paid out on the firm's stock?