Question :
121. Distinguishing a stock dividend from a stock split can sometimes : 1230393
121. Distinguishing a stock dividend from a stock split can sometimes cause difficulties. Usually firms treat small-percentage distributions, say less than a _____ increase in the number of shares, as stock dividends and larger ones as stock splits.
A. 5%
B. 10%
C. 25%
D. 50%
E. 100%
122. Which of the following is true regarding stock splits?
A. The corporation issues additional shares of stock to shareholders in proportion to their existing holdings.
B. The firm receives no additional assets.
C. Firms may execute a stock split by reducing the par value of the common stock in proportion to the new number of shares issued.
D. Firms may execute a stock split by not making any change in par value but by issuing additional shares of the same par value.
E. all of the above
123. A stock split accomplished by altering the par value in direct proportion to the number of new shares
A. does not require a journal entry.
B. decreases Additional Paid-In Capital or Retained Earnings.
C. increases Additional Paid-In Capital or Retained Earnings.
D. decreases Cash or Retained Earnings.
E. increases Cash or Retained Earnings.
124. A stock split that is accomplished by a change in par value that is not proportional to the new number of shares or if the firm does not change the par value, the firm
A. does not require a journal entry.
B. decreases Additional Paid-In Capital or Retained Earnings.
C. increases Additional Paid-In Capital or Retained Earnings.
D. decreases Cash or Retained Earnings.
E. increases Cash or Retained Earnings.
125. Which of the following is true regarding a reverse stock split?
A. Firms reduce the number of outstanding shares by increasing the par value of the stock.
B. Firms reduce the number of outstanding shares by canceling outstanding shares.
C. A reverse stock split usually increases the market value per share in inverse proportion to the reverse split.
D. Managers and governing boards might use reverse stock splits to keep the market price per share within some target trading range.
E. all of the above
126. Which of the following is not true regarding a reverse stock split?
A. Firms reduce the number of outstanding shares by increasing the par value of the stock.
B. Firms reduce the number of outstanding shares by canceling outstanding shares.
C. A reverse stock split usually increases the market value per share in inverse proportion to the reverse split.
D. Managers and governing boards might use reverse stock splits to keep the market price per share within some target trading range.
E. Analysts use reverse stock splits to signal that the market price per share will go up disproportionately.
127. Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Which of the following is/are true?
A. Treasury shares do not receive dividends, only.
B. Treasury shares do not have voting rights, only.
C. Treasury shares do not enter the calculation of earnings per share, only.
D. Treasury shares do not receive dividends, do not have voting rights, and do not enter the calculation of earnings per share.
E. none of the above
128. Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Reasons for reacquiring outstanding common stock include which of the following?
A. to use in option arrangements, only
B. to invest excess cash, only
C. to defend against an unfriendly takeover bid, only
D. to distribute cash to shareholders in a tax-advantaged way, only
E. to use in option arrangements, to invest excess cash, to defend against an unfriendly takeover bid, and to distribute cash to shareholders in a tax-advantaged way
129. Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Which of the following is/are true?
A. To fulfill commitments to deliver shares to its employees under employee stock option plans, the employer can reacquire shares so that the number of shares outstanding remains approximately constant.
B. Doing so avoids diluting existing shareholders’ voting interest and perhaps maintaining earnings per share.
C. The firm would project the expected number of shares needed for the exercise of employee stock options and repurchase that amount of shares in the open market.
D. all of the above
E. none of the above
130. Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Which of the following is/are true?
A. Some firms believe that their own shares provide a good investment.
B. Evidence supports the notion that share prices often increase after a firm announces a share repurchase program.
C. Share repurchases reduce common shareholders’ equity and increase the proportion of debt in the capital structure, making the firm more risky and therefore less attractive to an unfriendly bidder.
D. Some firms even borrow cash to repurchase shares, which affects the debt ratios even more than using already available cash to reacquire shares.
E. all of the above
