Question 1

A fast-growing company with many high net present value projects may maximize shareholder wealth by NOT paying a dividend.

Accepted Answer

A) True 
 B)False

Question 2

The dividend irrelevance hypothesis is based on all of the following assumptions except:

Accepted Answer

A)  investment decisions will not be altered by the amount of dividend payments. 
B)  investors do not need cash dividends to supplement their current income. 
C)  perfect capital markets. 
D)  borrowing decisions will not be altered by the amount of dividend payments. 
A)  investment decisions will not be altered by the amount of dividend payments. 
B)  investors do not need cash dividends to supplement their current income. 
C)  perfect capital markets. 
D)  borrowing decisions will not be altered by the amount of dividend payments.

Question 3

A corporation has been paying out $1 million per year in dividends for the past several years.This year,the company wants to pay the $1 million dividend,but can't.All of the following are reasons the company cannot continue its dividend payment policy except:

Accepted Answer

A)  the company's net income this year is less than $1 million. 
B)  the company's retained earnings balance at the end of the year is less than $1 million. 
C)  the company's cash balance is less than $1 million. 
D)  the company's liabilities exceed its assets. 
A)  the company's net income this year is less than $1 million. 
B)  the company's retained earnings balance at the end of the year is less than $1 million. 
C)  the company's cash balance is less than $1 million. 
D)  the company's liabilities exceed its assets.

Question 4

Share repurchases are not part of the stock valuation process because by definition the cash flow from a share repurchase ends the investment as the stock is no longer owned by the shareholder.

Accepted Answer

A) True 
 B)False

A fast-growing company with many high net present value projects may maximize shareholder wealth by NOT paying a dividend.

The dividend irrelevance hypothesis is based on all of the following assumptions except:

A corporation has been paying out $1 million per year in dividends for the past several years.This year,the company wants to pay the $1 million dividend,but can't.All of the following are reasons the company cannot continue its dividend payment policy except:

Share repurchases are not part of the stock valuation process because by definition the cash flow from a share repurchase ends the investment as the stock is no longer owned by the shareholder.

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Short-Term Financial Planning

Working-Capital Management

Current Asset Management

International Business Finance

Filters

Exam 13: Dividend Policy and Internal Financing

A fast-growing company with many high net present value projects may maximize shareholder wealth by NOT paying a dividend.

The dividend irrelevance hypothesis is based on all of the following assumptions except:

A corporation has been paying out $1 million per year in dividends for the past several years.This year,the company wants to pay the $1 million dividend,but can't.All of the following are reasons the company cannot continue its dividend payment policy except:

Share repurchases are not part of the stock valuation process because by definition the cash flow from a share repurchase ends the investment as the stock is no longer owned by the shareholder.

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Short-Term Financial Planning

Working-Capital Management

Current Asset Management

International Business Finance

Filters