Question : Multiple Choice Questions 24. When a firm declares a special cash dividend : 1284372

Multiple Choice Questions
 

24. When a firm declares a special cash dividend of $1 per share, shareholders realize that the: 
A. annual dividend will be $4 per share.
B. dividends are considered regular.
C. dividend is not likely to be repeated.
D. stock must be owned prior to the declaration date to receive the dividend.

25. Corporations pay regular cash dividends to their: 
A. common shareholders.
B. preferred bondholders.
C. fixed-rate bondholders.
D. convertible bondholders.

26. The record date for a dividend is scheduled between the: 
A. declaration date and the with-dividend date.
B. with-dividend date and ex-dividend date.
C. ex-dividend date and the payment date.
D. declaration date and ex-dividend date.

27. What would you expect to happen to the price of a share of stock on the day it goes ex-dividend? The price should: 
A. increase by the amount of the dividend.
B. decrease by the amount of the dividend.
C. decrease by one-half the amount of the dividend.
D. remain constant.

28. A dividend is declared on January 1, has an ex-dividend date of January 20, and a record date of January 26. Which of the following shareholders will not receive the dividend? 
A. A shareholder who purchases on December 31.
B. A shareholder who purchases on January 10.
C. A shareholder who purchases on January 19.
D. A shareholder who purchases on January 24.

29. Boards of directors may be legally restricted in their declaration of dividends if: 
A. the cash must be borrowed for the dividend payment.
B. dividends have increased substantially over a short period of time.
C. the dividend would create a situation of insolvency.
D. the stock is selling at a low relative price.

30. ABC Corp. stock is selling for $30 per share when a 10% stock dividend is declared. If you own 100 shares of ABC Corp. then you will receive: 
A. $3.
B. $3 times 100 shares = $300.
C. $300 plus 10 shares of ABC Corp.
D. 10 shares of ABC Corp.

31. XYZ Corp. has 1,000 shares outstanding and retained earnings of $25,000. Theoretically, what would you expect to happen to the price of their stock, currently selling for $30 per share, if a 25% stock dividend is declared? 
A. Price should increase to $44.00 per share.
B. Price should increase to $37.50 per share.
C. Price should decrease to $24.00 per share.
D. Nothing; price should remain at $30.00.

32. The stock in your portfolio was selling for $40 per share yesterday, but has today declared a three-for-two split. Which of the following statements seems to be true? 
A. There will be two-thirds as many shares outstanding, and they will sell for $60.00 each.
B. There will be four times as many shares outstanding, and they will sell for $160.00 each.
C. There will be 50% more shares outstanding, and they will sell for $26.67 each.
D. There will be one-and-one-half times as many shares outstanding, and they will sell for $60.00 each.

33. A corporation’s dividend payout ratio is the percentage of _____ paid out as dividends. 
A. cash
B. earnings
C. earnings before interest and taxes
D. retained earnings