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Chapter19-DividendsandOtherPayouts19-1Chapter19DividendsandOtherPayoutsAnswerKeyMultipleChoiceQuestions1.Paymentsmadeoutofafirm'searningstoitsownersintheformofcashorstockarecalled:A.dividends.B.distributions.C.sharerepurchases.D.payments-in-kind.E.stocksplits.Difficultylevel:EasyTopic:DIVIDENDSType:DEFINITIONS2.Paymentsmadebyafirmtoitsownersfromsourcesotherthancurrentoraccumulatedearningsarecalled:A.dividends.B.distributions.C.sharerepurchases.D.payments-in-kind.E.stocksplits.Difficultylevel:EasyTopic:DISTRIBUTIONSType:DEFINITIONSChapter19-DividendsandOtherPayouts19-23.Acashpaymentmadebyafirmtoitsownersinthenormalcourseofbusinessiscalleda:A.sharerepurchase.B.liquidatingdividend.C.regularcashdividend.D.specialdividend.E.extracashdividend.Difficultylevel:EasyTopic:REGULARCASHDIVIDENDSType:DEFINITIONS4.Acashpaymentmadebyafirmtoitsownerswhensomeofthefirm'sassetsaresoldoffiscalleda:A.liquidatingdividend.B.regularcashdividend.C.specialdividend.D.extracashdividend.E.sharerepurchase.Difficultylevel:EasyTopic:LIQUIDATINGDIVIDENDSType:DEFINITIONS5.Thedateonwhichtheboardofdirectorspassesaresolutionauthorizingpaymentofadividendtotheshareholdersisthe_____date.A.ex-rightsB.ex-dividendC.recordD.paymentE.declarationDifficultylevel:EasyTopic:DECLARATIONDATEType:DEFINITIONSChapter19-DividendsandOtherPayouts19-36.Thedatebeforewhichanewpurchaserofstockisentitledtoreceiveadeclareddividend,butonorafterwhichshedoesnotreceivethedividend,iscalledthe_____date.A.ex-rightsB.ex-dividendC.recordD.paymentE.declarationDifficultylevel:EasyTopic:EX-DIVIDENDDATEType:DEFINITIONS7.Thedatebywhichastockholdermustberegisteredonthefirm'srollashavingshareownershipinordertoreceiveadeclareddividendiscalledthe:A.ex-rightsdate.B.ex-dividenddate.C.dateofrecord.D.dateofpayment.E.declarationdate.Difficultylevel:EasyTopic:DATEOFRECORDType:DEFINITIONS8.Thedateonwhichthefirmmailsoutitsdeclareddividendsiscalledthe:A.ex-rightsdate.B.ex-dividenddate.C.dateofrecord.D.dateofpayment.E.declarationdate.Difficultylevel:EasyTopic:DATEOFPAYMENTType:DEFINITIONSChapter19-DividendsandOtherPayouts19-49.Theabilityofshareholderstoundothedividendpolicyofthefirmandcreateanalternativedividendpaymentpolicyviareinvestingdividendsorsellingsharesofstockiscalled(a):A.perfectforesightmodel.B.MMPropositionI.C.capitalstructureirrelevancy.D.homemadeleverage.E.homemadedividends.Difficultylevel:MediumTopic:HOMEMADEDIVIDENDSType:DEFINITIONS10.Themarket'sreactiontotheannouncementofachangeinthefirm'sdividendpayoutislikelythe:A.informationcontenteffect.B.clienteleeffect.C.efficientmarketshypothesis.D.MMPropositionI.E.MMPropositionII.Difficultylevel:MediumTopic:INFORMATIONCONTENTEFFECTType:DEFINITIONS11.Theobservedempiricalfactthatstocksattractparticularinvestorsbasedonthefirm'sdividendpolicyandtheresultingtaximpactoninvestorsiscalledthe:A.informationcontenteffect.B.clienteleeffect.C.efficientmarketshypothesis.D.MMPropositionI.E.MMPropositionII.Difficultylevel:EasyTopic:CLIENTELEEFFECTType:DEFINITIONSChapter19-DividendsandOtherPayouts19-512.A_____isanalternativemethodtocashdividendswhichisusedtopayoutafirm'searningstoshareholders.A.mergerB.acquisitionC.payment-in-kindD.stocksplitE.sharerepurchaseDifficultylevel:EasyTopic:SHAREREPURCHASEType:DEFINITIONS13.Apaymentmadebyafirmtoitsownersintheformofnewsharesofstockiscalleda_____dividend.A.stockB.normalC.specialD.extraE.liquidatingDifficultylevel:EasyTopic:STOCKDIVIDENDSType:DEFINITIONS14.Anincreaseinafirm'snumberofsharesoutstandingwithoutanychangeinowners'equityiscalleda:A.specialdividend.B.stocksplit.C.sharerepurchase.D.tenderoffer.E.liquidatingdividend.Difficultylevel:EasyTopic:STOCKSPLITSType:DEFINITIONSChapter19-DividendsandOtherPayouts19-615.Thedifferencebetweenthehighestandlowestpricesatwhichastockhastradediscalledits:A.averageprice.B.bid-askspread.C.tradingrange.D.openingprice.E.closingprice.Difficultylevel:EasyTopic:TRADINGRANGEType:DEFINITIONS16.Inareversestocksplit:A.thenumberofsharesoutstandingincreasesandowners'equitydecreases.B.thefirmbuysbackexistingsharesofstockontheopenmarket.C.thefirmsellsnewsharesofstockontheopenmarket.D.thenumberofsharesoutstandingdecreasesbutowners'equityisunchanged.E.shareholdersmakeacashpaymenttothefirm.Difficultylevel:EasyTopic:REVERSESPLITSType:DEFINITIONS17.Thelastdateonwhichyoucanpurchasesharesofstockandstillreceivethedividendisthedate_____businessday(s)priortothedateofrecord.A.zeroB.oneC.threeD.fiveE.sevenDifficultylevel:EasyTopic:DIVIDENDPAYMENTSType:CONCEPTSChapter19-DividendsandOtherPayouts19-718.Lesliepurchased100sharesofGT,Inc.stockonWednesday,June7th.Martipurchased100sharesofGT,Inc.stockonThursday,July8th.GTdeclaredadividendonJune20thtoshareholdersofrecordonJuly12thandpayableonAugust1st.WhichoneofthefollowingstatementsconcerningthedividendpaidonAugust1stiscorrectgiventhisinformation?A.NeitherLeslienorMartiareentitledtothedividend.B.LeslieisentitledtothedividendbutMartiisnot.C.MartiisentitledtothedividendbutLeslieisnot.D.BothMartiandLeslieareentitledtothedividend.E.BothMartiandLeslieareentitledtoone