Question :
111. A stock dividend indicates A. a permanent commitment of assets generated by : 1245763
111. A stock dividend indicates
A. a permanent commitment of assets generated by reinvested earnings.
B. an increase to total owners’ equity.
C. an attempt to shift the control of the company by diluting ownership.
D. a transfer of corporate assets to shareholders without using cash.
E. a temporary commitment of assets generated by reinvested earnings.
112. A firm may postpone or omit
A. mortgage payments.
B. preferred dividend payments.
C. bond payments.
D. loan payments.
E. debenture payments.
113. How would total stockholders’ equity be affected by the declaration of each of the following?
Stock Stock
Dividend Split
A. No effect Increase
B. Increase Decrease
C. Decrease Decrease
D. No effect No effect
E. Decrease Increase
114. On September 30, Pineville Corporation declared and issued a 10% common stock dividend. Prior to this dividend, Pineville had 50,000 shares of $5 par value common stock issued and outstanding. The fair value of Pineville’s common stock was $52 per share on September 30. As a result of this stock dividend, Pineville’s total stockholders’ equity
A. increased by $25,000.
B. decreased by $25,000.
C. increased by $260,000.
D. decreased by $260,000.
E. did not change.
115. 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
116. 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
117. 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
118. 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
119. Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Which of the following is/are not 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. Share repurchases use up available cash and thereby increase the attractiveness of the company to outsiders who believe that the stock buy back makes the company an attractive target.
120. Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Which of the following is/are not 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. Rather than pay dividends to all shareholders, many of whom will owe personal income taxes on the entire dividend amount, the firm can buy back shares from those who wish to receive cash.
D. Some shareholders will have lower tax rates on receipts from sales of shares than on dividend receipts.
E. Share repurchases use up available cash and thereby increase the attractiveness of the company to outsiders who believe that the stock buy back makes the company an attractive target.
