By purchasing shares through a firm’s dividend reinvestment plan (or DRIP), shareholders typically can acquire shares at a value that is above the prevailing market price. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Dividend reinvestment plans (DRIPs) enable stockholders to use dividends received on a firm’s stock to acquire additional shares–even fractional shares–at little or no transaction (brokerage) cost. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Because retained earnings are a form of internal financing, the dividend decision can significantly affect a firm’s external financing requirements. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Ignoring general market fluctuations, the stock’s price would be expected to drop by the amount of the declared dividend on the ex dividend date. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Dividends provide information about a firm’s current performance. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
When common stock is repurchased and retired, the underlying motive is to ________. A) delay taxes B) boost the stock’s dividends C) distribute the excess cash to the owners D) reduce the retained earnings balance ANSWER C
Date: September 19th, 2020
The ________ motive for holding cash is the need for a safety supply to act as a financial reserve against unexpected events. A) Transactional B) Precautionary C) Speculative D) Intuitive ANSWER B
Date: September 19th, 2020
The usual sources of capital for investing projects include all of the following EXCEPT: A) LIBOR. B) Retained Earnings. C) Bank Loans. D) Domestically Marketed Stocks and Bonds. ANSWER A
Date: September 19th, 2020
The interest rate on Eurodollar loans tends to be based on A) Eurobonds B) Forward rates C) Spot rates D) LIBOR ANSWER D
Date: September 19th, 2020
The three motives for holding cash are: A) float reduction, precautionary, and speculative. B) buffer stock, speculative, and transactional. C) speculative, transactional, and precautionary. D) float reduction, buffer stock, and transactional. E) convenience, transactional, and precautionary. ANSWER C
Date: September 19th, 2020
