Chapter 14 Flashcards
(14 cards)
Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm’s shareholders?
Dividend
Which one of the following is the date on which the board of directors agrees to pay a
dividend and passes a resolution to do so?
Declaration date
On which one of the following dates is the determination made as to which shareholders will receive a dividend payment?
Record date
On which one of the following dates are dividend checks mailed?
Payment date
ABC Company has paid a quarterly dividend of $0.42 per share for the past two years. This quarter, the firm plans to pay $0.42 plus an additional $0.05 per share. The firm has stated that it is uncertain whether it will pay $0.42 or $0.47 per share next quarter. Which one of the following is the best description of the additional $0.05 that is being paid this quarter?
Extra dividend
Which one of the following is an example of a liquidating dividend?
ABC Company recently sold its grain storage facility and is distributing the proceeds of
that sale to its shareholders
All else equal, on the __________, the market value of a stock will tend to decrease by roughly the aftertax value of the dividend
Ex-dividend date
On Friday, March 4, ABC Company announced it would pay a dividend of $.63 per share on Friday, April 1. The ex-dividend date is Wednesday, March 23. What is the date of record?
Wednesday, March 23
ABC Company declared a dividend on Friday, November 13, that is payable on Friday, December 11, to holders of record on Monday, November 30, also the ex-dividend date. What is the latest date that you can purchase this stock if you wish to receive this dividend?
Assume there are no holidays within this period of time.
Friday, November 27
ABC Company declared a dividend to holders of record on Thursday, October 15, the same
day as the ex-dividend date that is payable on Monday, November 2. Susan purchased 200 shares of Davidson Interiors stock on Wednesday, October 14, and Jake purchased 100 shares of this stock on the following day. Which one of the following statements is correct
given this information?
Susan will receive the dividend but Jake will not
Two weeks ago, ABC Company declared a dividend of $1.34 a share. The ex-dividend date
is tomorrow. All else constant, which one of the following is the best estimate of ABC Company’s opening stock price tomorrow?
Today’s closing price minus an amount approximately equal to the aftertax value of the
dividend
ABC Company has excess cash and has opted to buy some of its outstanding shares from
the open market. What is this process of buying called?
Stock repurchase
ABC stock is currently selling for $22 per share. The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $26 per share. What type of offer is being made?
Targeted repurchase
Considering the signaling effect, what action would be the best option for a company to
return capital to shareholders during quarters with extraordinary financial performance and
convey strong management commitment?
Declare a one-time special cash dividend
