Exam 14: Payout Policy

The date of record (dividends) is the actual date on which a company will mail the dividend payment to the holders of record.

Modigliani and Miller suggest that the value of a firm is not affected by the firm's dividend policy, due to ________.

Because retained earnings are a form of internal financing, the dividend decision can significantly affect a firm's external financing requirements.

Which of the following is a reason for a firm for repurchasing its shares?

A firm has had the following earnings history over the last five years: If the firm's dividend policy was based on a constant payout ratio of 50 percent for all of the years with earnings over $1.50 per share and a zero payout otherwise, the annual dividends for 2012 and 2015 were ________.

The representative theory of dividends, as espoused by Modigliani and Miller, suggests that dividends represent a significant active decision variable that affects firm value.

Which type of dividend payment policy has the advantage that if a firm's earnings drop, dividends will still be maintained at a relatively constant level?

The stock repurchase can be viewed as a cash dividend.

In establishing a dividend policy, a firm should retain funds for investment in projects yielding higher returns than the owners could obtain from external investments of equal risk.

A ________ has an effect on a firm's share price similar to that of a ________.

When a firm pays a stated dollar dividend and adjusts the payment as earnings increase, its dividend policy can be called ________.

Due to clientele effect, Modigliani and Miller argue that the shareholders get what they expect and, thus, the value of a firm's stock is unaffected by dividend policy.

Dividend payment policy is a form of ________.

When common stock is repurchased and retired, the underlying motive is to ________.

Repurchase of stock ________ the earnings per share and ________ the market price of stock.

A dividend reinvestment plan enables stockholders to ________.

A firm has had the following earnings history over the last five years: If the firm's dividend policy was to pay $0.25 per share each period except when earnings exceed $1.50, an extra dividend equal to 50 percent of the earnings above $1.50 would be paid, the annual dividends for 2012 and 2015 were ________.

Ex dividend is ________.

The repurchase of common stock results in a type of reverse dilution, since the earnings per share and the market price of stock are increased by reducing the number of shares outstanding.

At a firm's quarterly dividend meeting held April 9, the directors declared a $0.50 per share cash dividend for the holders of record on Monday, May 1. The firm's stock will sell ex dividends on ________.