Read Multiple Choice Questions and answers. D) Yes, the investor should create a homemade dividend by buying $100 worth of stock. 3) The value of perquisites is chargeable to tax under the head Salaries. A firm has the following quarterly earnings projections: 1st quarter $75,000 loss; 2nd quarter +$80,000; 3rd quarter +$150,000; 4th quarter +$210,000. B) The value of a firm's stock is ultimately determined by its dividend policy. Decrease the transaction costs of shareholders, Topic: AUTOMATED DIVIDEND REINVESTMENT PLANS, III. The main consideration in determining the dividend policy is the objective of maximisation of wealth of shareholders. The dividend-payout ratio is equal to. Use the following to answer questions 89-93: Your firm is expected to pay dividends of $100 per share at the end of one year and $100 at the end of the second year. What happens to the retained earnings account on the balance sheet? Since shareholders appear to dislike unstable dividends, a residual dividend policy will likely not be in the best interest of the existing shareholders even if adopting such a policy allows the firm to undertake all of its positive NPV projects. Suppose this firm declares a 5% (small) stock dividend. Suppose this firm declares a 5% (small) stock dividend. Dividends & Dividend Policy Chapter Exam Instructions. Dividend Policy MCQ - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. All else the same, an investor is likely to prefer firms with high dividend payouts for each of the following reasons EXCEPT: A) Flotation costs are significant. they always keep checking the grading patterns and assessments. Assume there are no taxes or transaction costs. Answer:a. Free PDF Download of CBSE Business Studies Multiple Choice Questions for Class 12 with Answers Chapter 9 Financial Management. If the marginal tax rate on capital gains is equal to the marginal tax rate on income, a tax-conscious investor will: A) Prefer a low dividend payout because the after-tax return to the shareholder will be greater. A) In practice, there are essentially no differences between a share repurchase and a cash dividend. If you owned 800 shares before the split, how many do you own after the split? 5. A) Dividends are never a liability of the firm. Test your understanding with practice problems and step-by-step solutions. Most students will likely answer this question in the affirmative, supporting their position by citing the factors that encourage a high dividend payout such as the desire for current income, uncertainty resolution, and the tax and legal benefits from high dividends. E) The number of shares owned by each individual investor will halve. an indication of a company's liquidity. a) Is the complex that brings together the representatives of governments, international organizations, NGOs, and the corporate sector for the formulation and implementation of global public policy. Response: (80,000 x $1) + 320,000 + 780,000 = $1,180,000, Response: Increases by $80,000 x .05 = $4,000, Topic: STOCK DIVIDENDS AND ADDITIONAL PAID-IN CAPITAL, Response: Increases by $80,000 x .05 x (17 - 1) = $64,000, Topic: STOCK DIVIDENDS AND TOTAL OWNERS’ EQUITY, Topic: STOCK DIVIDENDS AND RETAINED EARNINGS, Response: Decreases by $80,000 x .05 x 17 = $68,000, Topic: LARGE STOCK DIVIDENDS AND RETAINED EARNINGS, Response: Common stock rises $80,000, so RE falls by the same amount, Topic: STOCK SPLITS AND ADDITIONAL PAID-IN CAPITAL, Topic: STOCK SPLITS AND TOTAL OWNERS' EQUITY, Topic: STOCK SPLITS AND SHARES OUTSTANDING. 8. a) Discounted Cash flow b) Income or earnings - where the firm is valued on some multiple of accounting income or earnings. During year 2, Arlo declared and paid dividends of $240,000 on preferred stock. We provide all important questions and answers from chapter Company Law. The tutoring class from your site came out to be so effective that now I can confidently solve even the difficult question within some seconds. B) The additional paid-in capital account decreases. Q.9: Masood invests a part of Rs. share of profits that is distributed to shareholdersShareholderA shareholder can be a person Page-9 section-1 b. I am not that good with my grammar and that makes my content very bad and messy. III. My university is against Plagiarism. What is the stock price before the alternative dividend plan is adopted? III. The better student will realize that this may be short-sighted, for if the firm cannot fund positive NPV projects without cutting its dividend, then it will likely seek outside sources of capital instead. In addition, some may argue that if there is an unsatisfied dividend clientele, the firm will benefit from initiating dividend payments. Define un-claimed dividend. D) Total shareholders' equity will increase by 15%. Financial Management-Dividend Policy: Questions 1-4 of 34. Define un-claimed dividend. GKToday’s Daily Current Affairs Quiz is published daily with Multiple Choice (MCQs) / Objective Current Affairs Questions and Answers for SSC, IBPS, Banking, Railways, Various entrance exams, state level competitions such as KAS/ KPSC, UPPSC, RPSC, MPPSC, MPSC and all state PCS Examinations. What happens to the additional paid-in capital account on the balance sheet? There are certain groups that prefer low dividend payouts and certain groups that prefer high dividend payouts; these are dividend clienteles. All our work is original and unique. The online course provided by myassignmenthelp not only increased my level of grammar but taught me more about my course. Suppose a firm wishes to have its stock listed on an exchange but its share price is not high enough to meet the exchange's specified minimum price level. B) The government lowered capital gains tax rates. C) Purchase of Raw Materials for Cash The date on which the firm mails out its declared dividends is called the _______________. Gkseries provide you the detailed solutions on Company Law as per exam pattern, to help you in day to day learning. This is different from portfolio foreign investment with respect to the element of ‘control’. Maintain a target dividend payout ratio, Topic: SHARE REPURCHASES AND CASH DIVIDENDS, Total div = $200,000 x .30 = $60,000; DPS = $60,000 / 80,000 = $0.75; DY = $0.75 / 25 = .03, Response: Total div = $200,000 x .30 = $60,000; DPS = $60,000 / 80,000 = $0.75, Total div = $1.50 x 80,000 = $120,000; Payout ratio = $120,000 / 200,000 = .60; b = 1 - .60 = .40, Response: Ex= $750 - 0.75 = $6.75; sell for 500 x $6.75 = $3,375, Equity needed for projects = ($3,750,000 E) / E = 1.25; E = $1,666,667, Dividends = $1,900,000 - 1,666,667 = $233,333, Topic: STOCK DIVIDENDS AND CAPITAL SURPLUS. But when the assignment came it was 100 % unique. View All. 1; 2; 3 » Question No : 1 A man invested Rs. One consequence of a residual dividend policy is that: A) The firm must be concerned about flotation costs. Share allotment account is a -----. dividend policy, you can create the cash ‡ows you prefer by selling enough shares at the end of the …rst year toreceive the extra$9. Dividend Policy. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 7 Issue of Shares. Gkseries provide you the detailed solutions on Company Law as per exam pattern, to help you in day to day learning. I used it in my next assignment and even my teachers were surprised with the appropriate use of references. E) No, it is not possible to recreate the original dividend plan of the firm. I gave them the work but I still had doubts in my mind. All else the same, an investor is likely to prefer a firm with a high dividend payout: If the firm has few positive NPV projects in which it can invest. we have collected all the data and merged them into one file you will be able to download the … Which of the following is true regarding share repurchases? I get fewer grades because of weak grammar. See answer. In fact, they told me the thing I never knew about my University. C) Yes, the investor should create a homemade dividend by buying $200 worth of stock. What are the mode of payment of dividend? They have all the knowledge about every university. Is this possible, and if so, how? not important when determining dividends. Investors require a 12% return on investments of this type. an indication of a company's liquidity. Assume the firm pays the $30,000 excess cash in the form of a cash dividend. In customer service, the person assured me about 0 copying. Dividend Policy MCQ Page-1 section-3 Just click on the button next to each answer and you'll get immediate feedback. Get help with your Dividend policy homework. A firm has 80,000 shares of stock outstanding with a market price of $25 per share. If net income for the year is $200,000 and the retention ratio is 70%, what is the dividend yield on the firm's stock? Punjab, KPK, Sindh, Federal, Blochistan, Cambridge o-level a-level, Current Affairs, General Knowledge, MCAT, ECAT, GAT, GRE, and CSS MCQs Very cheap and quality work. This question challenges students to think about the relevance of dividends. D) The stock price declines by the amount of the dividend on the holder-of-record date. 120 and the remainder in 15% stock at Rs. If the company follows a residual dividend policy, what dividend will be paid? If an individual stockholder reinvests dividends under a company's dividend reinvestment plan, the reinvested dividends are. 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