Chap 17 Flashcards
Dividends
Payment made out of the firm’s earnings to its owners either in the form of cash or stock
Distribution
Payment made by the firm to its owners from a source other than current or accumulated earnings
Regular Cash Dividends
Cash payment made by a firm to its owners in the normal course of business, usually made 4 times a year
Declaration date
Date on which the board of directors passes a resolution to pay dividend
Ex-Dividend date
Date 2 business days before the date of record, establishing those individuals entitled to dividends
Date of record
Date on which holders of record are designated to receive dividends
Date of payment
Date of the dividend payment
Homemade Dividends
Idea that individuals can undo corporate dividend polidy by reinvesting dividends or selling shares of stock
Stripped common shares
Common stock on which dividends and capital gaines are repackged and soled separately
Information Content effect
The market’s reaction to a change in corporate dividend
Clientel effect
Stocks attract particular groups based on dividend yield and resulting tax effect
Residual dividend approach
Policy where a firm pays dividends only after meeting its investment needs while maintaining a desired debt / Equity ratio
Target payout ratio
A firm’s long term desired dividend-to-earning ratio
Repurchase of shares
Another method used to payout a firm’s earnings to its owners which provieds more preferable tax treatment than dividend
Stock Dividend
Payment made by the firm to its owners in the form of stock, diluting the value of each share outstanding
Stock Split
increase in a firm’s share outstanding without any change in owner’s equity
Trading range
Price range between highest and owest price at which stock is traded
Revers Split
Procedure in which a firm’s # of share outstanding is reduced
