Deck 16: Dividends and Other Payouts

Question 1

In a reverse stock split:

A)the number of shares outstanding increases and owners' equity decreases.
B)the number of shares outstanding decreases but owners' equity is unchanged.
C)shareholders make a cash payment to the firm.
D)the firm buys back existing shares of stock on the open market.
E)the firm sells new shares of stock on the open market.

Answer 1

the number of shares outstanding decreases but owners' equity is unchanged.

Question 2

The date on which the board of directors passes a resolution authorizing payment of a dividend to the shareholders is the _____ date.

A)ex-rights
B)ex-dividend
C)record
D)payment
E)declaration

Answer 2

declaration

Question 3

The observed empirical fact that stocks attract particular investors based on the firm's dividend policy and the resulting tax impact on investors is called the:

A)clientele effect.
B)efficient markets hypothesis.
C)information content effect.
D)MM Proposition I.
E)MM Proposition II.

Answer 3

clientele effect.

Question 4

Which one of these increases a firm's number of shares outstanding without changing its owners' equity?

A)Share repurchase
B)Tender offer
C)Special dividend
D)Stock split
E)Liquidating dividend

Question 5

A _____ is an alternative method to cash dividends that is used to distribute a firm's earnings to shareholders.

A)merger
B)reverse stock split
C)payment-in-kind
D)share repurchase
E)stock split

Question 6

How frequently do dividend-paying firms in the U.S.generally pay regular cash dividends?

A)Annually
B)Semiannually
C)Quarterly
D)Monthly
E)Biannually

Question 7

Payments made out of a firm's earnings to its owners in the form of cash or stock are called:

A)stock splits.
B)distributions.
C)dividends.
D)payments-in-kind.
E)share repurchases.

Question 8

A payment made by a firm to its owners in the form of new shares of stock is called a _____ dividend.

A)special
B)extra
C)normal
D)stock
E)liquidating

Question 9

The market's reaction to the announcement of a change in the firm's dividend payout is likely the:

A)clientele effect.
B)information content effect.
C)efficient markets hypothesis.
D)MM Proposition I.
E)MM Proposition II.

Question 10

The ability of shareholders to undo the dividend policy of the firm and create an alternative dividend payment policy via reinvesting dividends or selling shares of stock is called a:

A)perfect foresight model.
B)homemade leverage.
C)homemade dividend policy.
D)capital structure irrelevancy.
E)MM Proposition I.

Question 11

Payments made by a firm to its owners from sources other than current or accumulated earnings are called:

A)distributions.
B)interest payments.
C)share repurchases.
D)payments-in-kind.
E)stock splits.

Question 12

A cash payment made by a firm to its owners when some of the firm's assets are sold off is called a(n):

A)extra cash dividend.
B)special dividend.
C)regular cash dividend.
D)liquidating dividend.
E)share repurchase.

Question 13

All else equal,the market value of a stock will tend to decrease by roughly the amount of the dividend on the:

A)dividend declaration date.
B)ex-dividend date.
C)date of record.
D)date of payment.
E)day after the date of payment.

Question 14

Alicia purchased 100 shares of GT stock on Wednesday,July 7^th.Nick purchased 100 shares of GT,stock on Thursday,July 8^th.GT declared a dividend on June 20^th to shareholders of record on July 12^th and payable on August 1^st.Which one of the following statements concerning the dividend paid on August 1^st is correct given this information?

A)Neither Alicia nor Nick are entitled to the dividend.
B)Nick is entitled to the dividend but Alicia is not.
C)Alicia is entitled to the dividend but Nick is not.
D)Both Alicia and Nick are entitled to the dividend.
E)Both Alicia and Nick are entitled to a prorata share of the dividend.

Question 15

The highest and lowest prices at which a stock has traded over a period of time is called its:

A)bid-ask spread.
B)average price.
C)closing price.
D)opening price.
E)trading range.

Question 16

The date before which a new purchaser of stock is entitled to receive a declared dividend,but on or after which she does not receive the dividend,is called the _____ date.

A)ex-dividend
B)ex-rights
C)record
D)payment
E)declaration

Question 17

The date by which a stockholder must be registered on the firm's roll as having share ownership in order to receive a declared dividend is called the:

A)ex-dividend date.
B)date of record.
C)ex-rights date.
D)declaration date.
E)date of payment.

Question 18

The date on which the firm mails out its declared dividends is called the:

A)ex-dividend date.
B)ex-rights date.
C)date of payment.
D)date of record.
E)declaration date.

Question 19

If you want to receive the recently declared dividend on ABG stock,you must purchase your shares _____ or more business day(s)prior to the date of record.

A)four
B)one
C)two
D)three
E)five

Question 20

A cash payment made by a firm to its owners in the normal course of business is called a(n):

A)share repurchase.
B)liquidating dividend.
C)special dividend.
D)regular cash dividend.
E)extra cash dividend.

Question 21

Which of these were identified as the two drawbacks of a fixed repurchase strategy?
I.The repurchase could be a negative net present value investment
II.Lack of a monitoring mechanism to ensure the repurchase was completed
III.The extra tax burden the strategy places on shareholders
IV.The increased agency problems that result from such a strategy

A)I and II only
B)II and III only
C)I,III,and IV only
D)II,III,and IV only
E)I,II,III,and IV

Question 22

From a tax-paying shareholder's point of view,a stock repurchase:

A)is equivalent to a stock split.
B)is more desirable than a cash dividend.
C)is more highly taxed than a cash dividend.
D)has the same tax effects as a cash dividend.
E)creates a tax liability even if the investor does not participate in the repurchase.

Question 23

Which one of these can a shareholder use to alter the dividend policy of a firm?

A)Homemade dividend
B)Stock split
C)Dutch auction
D)Stock repurchase
E)Tender offer

Question 24

Which one of the following is an argument in favor of a low dividend policy?

A)Few,if any,positive net present value projects are available to the firm
B)Only the gain on a sale of stock is taxed
C)Agency costs
D)Investor desire for current income
E)Lack of investor self-control

Question 25

Of the following factors,which one is considered to be the primary factor affecting a firm's dividend decision?

A)The personal taxes company stockholders incur on dividend distributions
B)Maintaining consistency with the historical dividend policy
C)Attracting retail investors
D)Attracting institutional investors
E)Sustainable changes in earnings

Question 26

Which of these are reasons why some firms choose repurchases over dividends?
I.To offset the dilution of ownership caused by the exercising of stock options
II.Repurchases offer more flexibility than dividends
III.Management believes the stock is currently overpriced
IV.Executive ownership of stock options

A)I and II only
B)II and IV only
C)I,II,and IV only
D)II,III,and IV only
E)I,II,III,and IV

Question 27

Dividend policy establishes the:

A)price that will paid in a Dutch auction.
B)frequency of liquidating dividends.
C)trade-off between dividends at various dates.
D)total value of a firm.
E)amount of each dividend that will be taxed to the shareholder.

Question 28

Stock splits are often used to:

A)adjust the debt-equity ratio such that it falls within a preferred range.
B)decrease the excess cash held by a firm.
C)increase both the number of shares outstanding and the market price per share simultaneously.
D)increase the total equity of a firm.
E)adjust the market price of a stock such that it falls within a preferred trading range.

Question 29

Quick Mart has been paying a quarterly dividend of $1.20 a share.Which of the following are valid reasons for the firm to reduce or eliminate these dividends?
I.The firm is on the verge of violating a bond restriction.
II.The firm wants to save cash for an acquisition with a 40 percent premium.
III.The firm can raise new capital easily at a very low cost.
IV.Congress just changed the tax laws eliminating all taxes on capital gains.

A)I and IV only
B)II and IV only
C)II,III,and IV only
D)I,II,and IV only
E)I,II,III,and IV

Question 30

The fact that flotation costs can be significant is justification for:

A)maintaining a high dividend policy.
B)maintaining a low dividend policy and rarely issuing extra dividends.
C)maintaining a constant dividend policy even when profits decline significantly.
D)a firm to issue larger dividends than its closest competitors.
E)a firm to maintain a constant dividend policy even if it frequently has to issue new shares of stock to do so.

Question 31

The argument that selling stock involves too much leeway is the:

A)primary argument for implementing homemade dividends.
B)primary argument against homemade dividends.
C)principal reason firms do reverse stock splits.
D)behavioral finance argument in favor of high dividends.
E)behavioral finance argument in favor of low dividends.

Question 32

How can management best signal the market that a firm is doing well?

A)Distribute a liquidating dividend
B)Issue additional shares of stock
C)Increase the regular dividend amount
D)Issue stock to pay the regular dividend
E)Replace the regular dividend with a stock dividend

Question 33

On the date of record the stock price drop related to the dividend is:

A)a full adjustment for the dividend payment.
B)a partial adjustment for the dividend payment because of the tax effect.
C)zero because the adjustment occurs on the ex-dividend date.
D)zero because the adjustment occurs on the payment date.
E)generally greater than the dividend amount.

Question 34

A reverse stock split associated with a cash buyout is sometimes used as a means of:

A)decreasing the liquidity of a stock.
B)decreasing the market value per share of stock.
C)increasing the number of stockholders.
D)raising cash from current stockholders.
E)eliminating small stockholders.

Question 35

Which of these are common characteristics of a tender offer?
I.The offer can be canceled if less than the desired number of shares are offered
II.Sellers are unaware that the buyer is the issuer of the security
III.The offers made by the sellers determine the price
IV.The offer price is greater than the market price

A)II and III only
B)I and IV only
C)I,II,and IV only
D)III and IV only
E)II,III,and IV only

Question 36

The information content of a regular dividend increase generally signals that:

A)management believes the future earnings of the firm will be strong.
B)the firm has recently sold a subsidiary.
C)the firm has a one-time surplus of cash.
D)the firm has more cash than it needs due to steadily declining sales.
E)future dividends will be lower.

Question 37

In respect to a balance sheet,a stock split will:

A)not affect the total value of any of the equity accounts.
B)increase the total value of the common stock account.
C)decrease the total book value of owners' equity.
D)increase the value of the capital in excess of par value account.
E)decrease the value of the retained earnings account.

Question 38

Which of the following tend to keep dividends low?
I.Corporate shareholders
II.Terms contained in bond indenture agreements
III.Manager's desire to maintain constant dividends over time
IV.Flotation costs

A)II and III only
B)I and IV only
C)II,III,and IV only
D)I,II,and III only
E)I,II,III,and IV

Question 39

Shareholders are more apt to prefer a high dividend payout if a firm:

A)has high flotation costs.
B)has a high rate of growth which requires additional funding.
C)offers high capital gains that are taxed at a favorable rate.
D)has lower tax rates than the shareholder.
E)will spend the funds on a high-premium acquisition if the dividend is not paid.

Question 40

Newtown stock is currently trading at $64 a share.The firm feels that its primary clientele of small retail investors can afford to spend between $3,000 and $3,500 to purchase a round lot of 100 shares.If excess funds are limited,the firm should consider a:

A)special dividend.
B)liquidating dividend.
C)stock split.
D)reverse stock split.
E)Dutch auction.

Question 41

A firm has a market value equal to its book value.Currently,the firm has excess cash of $300 and other assets of $6,200.Equity is worth $5,000.The firm has 500 shares of stock outstanding and net income of $720.What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?

A)$1.44
B)$.94
C)$.86
D)$1.53
E)$1.71

Question 42

KLT just paid an annual dividend of $2.10 a share.The firm has a target payout ratio of .45 and a speed of adjustment value of .5.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $4.94?

A)$2.16
B)$2.22
C)$2.47
D)$1.24
E)$1.11

Question 43

New Built wants to repurchase 20,000 shares at $21 a share through a tender offer.Shareholders responded by offering 26,500 shares at $21 a share.Assume you are a shareholder and offered your 300 shares as part of the shareholder response.How many of your shares should you expect New Built to purchase?

A)0 shares
B)300 shares
C)398 shares
D)226 shares
E)251 shares

Question 44

You currently own 200 shares of Hanover Co.The stock closed at a price of $22.38 a share today.Tomorrow morning a 10 percent stock dividend will occur.What will be the change in the value of your investment tomorrow assuming there are no other factors affecting the market price of the stock?

A)$0
B)-$447.60
C)$447.60
D)-$2.24
E)$2.24

Question 45

Cat's has 25,000 shares of stock outstanding with a par value of $1 per share and a market value of $16.79 per share.The balance sheet shows $25,000 in the common stock account,$465,000 in the capital in excess of par value account,and $868,500 in the retained earnings account.The firm just announced a 50 percent (large)stock dividend.What is the value of the retained earnings account after the dividend?

A)$856,000
B)$868,500
C)$658,625
D)$868,375
E)$881,000

Question 46

A firm has a market value equal to its book value.Currently,the firm has excess cash of $512 and other assets of $9,500.Equity is worth $6,400.The firm has 250 shares of stock outstanding and net income of $1,500.Assume the firm uses all of its excess cash for a stock repurchase.What will the price per share be after the repurchase?

A)$25.60
B)$27.83
C)$28.08
D)$24.19
E)$25.25

Question 47

A firm has a market value equal to its book value.Currently,the firm has excess cash of $525 and other assets of $9,200.Equity is worth $7,000.The firm has 1,000 shares of stock outstanding and net income of $420.The firm has decided to spend all of its excess cash on a share repurchase program.How many shares of stock will be outstanding after the stock repurchase is completed?

A)940 shares
B)945 shares
C)925 shares
D)930 shares
E)935 shares

Question 48

A stock currently sells for $8.40 a share.What type of stock split does the firm need to do if it wants to increase the price so that it trades around $25 a share?

A)2-for-5 reverse stock split
B)1-for-3 reverse stock split
C)2-for-3 reverse stock split
D)5-for-2 stock split
E)3-for-1 stock split

Question 49

Corner Mart has 150,000 shares of stock outstanding with a par value of $1 per share.The market value is $28.30 per share.The balance sheet shows $2,922,500 in the capital in excess of par account,$150,000 in the common stock account,and $1,322,700 in the retained earnings account.The firm just announced a 10 percent (small)stock dividend.What will the market price per share be after the dividend?

A)$27.20
B)$25.73
C)$28.30
D)$31.44
E)$31.13

Question 50

On May 18^th,you purchased 1,000 shares of LKM stock.On June 5^th,you sold 200 shares of this stock for $21 a share.You sold an additional 400 shares on July 8^th at a price of $22.50 a share.The company declared a $.40 per share dividend on June 25^th to holders of record as of Thursday,July 10^th.This dividend is payable on July 31^st.How much dividend income will you receive on July 31^st as a result of your ownership of LKM stock?

A)$0
B)$160
C)$240
D)$320
E)$400

Question 51

Martin Co.is paying a $1.10 per share dividend today.There are 120,000 shares outstanding with a par value of $1 per share.As a result of this dividend,the:

A)retained earnings will decrease by $120,000.
B)retained earnings will decrease by $132,000.
C)common stock account will decrease by $120,000.
D)common stock account will decrease by $132,000.
E)capital in excess of par value will decrease by $132,000.

Question 52

Assume the stockholders of GPO stock are in the 25 percent tax bracket.The closing price of the stock today was $28.49 a share.The firm pays a quarterly dividend of $1.40 per share.What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

A)$26.53
B)$27.09
C)$28.14
D)$27.61
E)$27.44

Question 53

A firm has a market value equal to its book value.Currently,the firm has excess cash of $400 and other assets of $7,600.Equity is worth $8,000.The firm has 300 shares of stock outstanding and net income of $900.The firm has decided to pay out all of its excess cash as a cash dividend.What will the earnings per share be after the dividend is paid?

A)$.25
B)$.45
C)$3.00
D)$4.80
E)$5.50

Question 54

Leslie owns 1,200 shares of Good Manners stock.Good Manners will pay a $1.12 per share dividend one year from now and a $1.32 per share dividend two years from now.Leslie does not want any dividend this year but does want as much dividend income as possible next year.Her required return on this stock is 10 percent and she plans on creating her own homemade dividends.Ignoring taxes,what will her homemade dividend per share be next year?

A)$2.420
B)$2.448
C)$2.426
D)$2.552
E)$2.561

Question 55

End Zone just paid an annual dividend of $.68 a share.The firm has a target payout ratio of .6 and a speed of adjustment value of .4.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $2.20?

A)$.94
B)$.90
C)$1.09
D)$1.32
E)$.53

Question 56

Pluto's has 14,000 shares of stock outstanding with a par value of $1 per share.The market value is $39.60 per share.The balance sheet shows $522,500 in the capital in excess of par account,$14,000 in the common stock account,and $429,700 in the retained earnings account.The firm just announced a 10 percent (small)stock dividend.What will be the balance in the retained earnings account after the dividend?

A)$429,700
B)$374,260
C)$428,300
D)$375,660
E)$372,8600

Question 57

Bruno's has 17,000 shares of stock outstanding with a par value of $1 per share and a market value of $38.29 per share.The balance sheet shows $17,000 in the common stock account,$528,360 in the capital in excess of par value account,and $432,500 in the retained earnings account.The firm just announced a 50 percent (large)stock dividend.What will be the balance in the capital in excess of par value after the dividend?

A)$211,395
B)$792,540
C)$845,325
D)$528,360
E)$202,895

Question 58

You own 460 shares of Western Steer stock.The company plans on issuing a dividend of $.90 a share one year from today and then issuing a final liquidating dividend of $5.40 a share two years from today.Your required rate of return is 14 percent.Ignoring taxes,what is the value of your holdings in this stock?

A)$2,274.52
B)$2,229.92
C)$2,898.00
D)$2,542.11
E)$3,303.72

Question 59

Assume the stockholders of EX stock are in the 28 percent tax bracket.The closing price of the stock today was $67.18 a share.The firm pays a quarterly dividend of $1.65 per share.What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

A)$66.72
B)$65.53
C)$67.18
D)$67.61
E)$65.99

Question 60

Lisa purchased 100 shares of ABC stock on May 15^th.On May 21^st,she purchased another 100 shares and then on May 22^nd she purchased 200 additional shares.The company declared a dividend of $1.32 a share on May 5^th to holders of record on Friday,May 23^rd.The dividend is payable on May 31^st.How much dividend income will she receive on May 31^st from ABC?

A)$0
B)$132
C)$264
D)$330
E)$528

Question 61

Winslow Co.has 142,000 shares of stock outstanding at a market price of $52 a share.The company just announced a 5-for-3 stock split.How many shares of stock will be outstanding after the split?

A)62,500 shares
B)82,200 shares
C)83,333 shares
D)233,333 shares
E)236,667 shares

Question 62

Robinson's has 15,000 shares of stock outstanding with a par value of $1 per share and a market price of $25.50 a share.The balance sheet shows $15,000 in the common stock account,$325,000 in the capital in excess of par value account,and $189,000 in the retained earnings account.The firm just announced a 3-for-2 stock split.What will the market price per share be after the split?

A)$17.00
B)$24.00
C)$38.25
D)$40.50
E)$38.06

Question 63

Pete's Pets has 15,000 shares of stock outstanding with a par value of $1 per share and a market price of $26 a share.The balance sheet shows $15,000 in the common stock account,$315,000 in the capital in excess of par value account,and $189,000 in the retained earnings account.The firm just announced a 5-for-4 stock split.How many shares of stock will be outstanding after the split?

A)10,000 shares
B)12,000 shares
C)18,750 shares
D)22,250 shares
E)24,000 shares

Question 64

Auto Supply has 84,600 shares of stock outstanding with a par value of $1 per share and a market value of $6.30 a share.The company just announced a 2-for-7 reverse stock split.What will be the par value per share after the split?

A)$.29
B)$.35
C)$1.00
D)$2.90
E)$3.50

Question 65

You own 100 shares of MXR stock.The company plans on issuing a dividend of $.50 a share one year from today,$.85 a share two years from today,and then a final liquidating dividend of $12.60 a share three years from today.Your required rate of return on this stock is 16 percent.Ignoring taxes,what is the value of one share of this stock to you today?

A)$9.14
B)$12.03
C)$11.25
D)$10.60
E)$10.47

Question 66

Luis owns 800 shares of a stock that announced it will pay a special $3.30 per share dividend one year from today and a regular $.30 per share dividend two years from today.He does not desire any dividend income this year but does want the maximum available to him next year.He can earn 12 percent on his funds.Ignoring taxes,what will be his total homemade dividend in two years?

A)$3,580.42
B)$2,880.00
C)$3,208.15
D)$3,196.80
E)$2,845.15

Question 67

A common stock is selling for $63 a share.The par value per share is $1 and the total market value of the firm is $94,500.How many shares of stock will be outstanding if the firm does a 3-for-1 stock split?

A)500 shares
B)1,000 shares
C)3,000 shares
D)3,500 shares
E)4,500 shares

Question 68

The Uptowner has 6,000 shares of stock outstanding with a par value of $1 per share and a market value of $12 per share.The balance sheet shows $6,000 in the common stock account,$58,000 in the capital in excess of par value account,and $32,500 in the retained earnings account.The firm just announced a 55 percent (large)stock dividend.What is the value of the common stock account after the dividend?

A)$7,000
B)$8,500
C)$9,300
D)$10,500
E)$14,000

Question 69

Jensen's has 22,000 shares of stock outstanding with a par value of $1 per share and a market price of $20.60 a share.The balance sheet shows $22,000 in the common stock account,$325,000 in the capital in excess of par value account,and $189,000 in the retained earnings account.The firm just announced a 5-for-2 stock split.What will be the balance in the capital in excess of par value account after the split?

A)$126,000
B)$210,000
C)$283,500
D)$325,000
E)$472,500

Question 70

Edie's has 14,500 shares of stock outstanding with a par value of $1 per share and a market value of $7.22 a share.The company just announced a 1-for-3 reverse stock split.What will be the value of the common stock account after the split?

A)$4,833
B)$18,850
C)$43,500
D)$11,154
E)$14,500

Question 71

The Retail Outlet has 6,000 shares of stock outstanding with a par value of $1 per share.The current market value of the firm is $420,000.The balance sheet reflects current retained earnings of $84,400.The company just announced a 1-for-5 reverse stock split.What will the par value per share be after the split?

A)$1.00
B)$.20
C)$.50
D)$5.00
E)$2.50

Question 72

BJ's Auto Group has 25,000 shares of stock outstanding at a market price of $14.50 a share.What will be the market price per share if the company does a 2-for-5 reverse stock split?

A)$14.50
B)$6.40
C)$29.50
D)$36.25
E)$5.80

Question 73

The Health Store has 135,000 shares of stock outstanding with a par value of $1 per share and a market value of $5 a share.The company has retained earnings of $76,500 and capital in excess of par value of $340,000.The company just announced a 1-for-5 reverse stock split.How many shares of stock will be outstanding after the split?

A)27,000 shares
B)67,500 shares
C)312,500 shares
D)675,000 shares
E)625,000 shares

Question 74

Robinson's has 18,500 shares of stock outstanding with a par value of $1 per share and a market price of $36 a share.The balance sheet shows $18,500 in the common stock account,$315,000 in the capital in excess of par value account,and $189,000 in the retained earnings account.The firm just announced a 3-for-2 stock split.What will be the value of the common stock account after the split?

A)$10,000
B)$12,500
C)$15,000
D)$18,500
E)$22,500

Question 75

Men's Place has 15,000 shares of stock outstanding with a par value of $1 per share and a market value of $19.50 per share.The balance sheet shows $15,000 in the common stock account,$218,000 in the capital in excess of par value account,and $312,500 in the retained earnings account.The firm just announced a 50 percent (large)stock dividend.What is the market value per share after the dividend?

A)$15.25
B)$13.00
C)$29.25
D)$19.50
E)$39.00

Question 76

The Retail Outlet has 9,000 shares of stock outstanding with a par value of $1 per share.The current market value of the firm is $420,000.The balance sheet shows a balance in the capital in excess of par value of $136,000 and retained earnings of $234,000.The company just announced a 3-for-2 stock split.What will be the common stock account balance after the split?

A)$3,000
B)$4,500
C)$9,000
D)$11,000
E)$12,000

Question 77

The Robert's Co.just paid an annual dividend of $3.22 a share.The firm has a target payout ratio of .75 and a speed of adjustment value of .8.What is the expected value of next year's annual dividend if the firm expects its earnings per share to be $6.33?

A)$5.80
B)$4.75
C)$3.58
D)$3.98
E)$4.44

Question 78

The Tinslow Co.has 65,000 shares of stock outstanding at a market price of $68 a share.The company just announced a 7-for-3 stock split.What will the market price per share be after the split?

A)$38.08
B)$29.14
C)$43.75
D)$158.67
E)$135.21

Question 79

Alpha Company is paying a $1.50 per share dividend today.There are 200,000 shares outstanding with a par value of $1 per share.As a result of this dividend,the:

A)retained earnings will decrease by $300,000.
B)retained earnings will decrease by $150,000.
C)common stock account will decrease by $300,000.
D)common stock account will decrease by $150,000.
E)capital in excess of par value account will decrease by $150,000.

Question 80

Fabric Outlet has 17,500 shares of stock outstanding with a par value of $1 per share.The current market value of the firm is $1,280,000.The balance sheet shows a balance of $142,000 in the capital in excess of par value account and retained earnings of $234,000.The company just announced a 5-for-3 stock split.What will be the market price per share after the split?

A)$35.11
B)$43.89
C)$51.08
D)$121.90
E)$108.17