D) All policies have the same likelihood of a dividend decrease because dividend changes are… 1 answer below »

D) All policies have the same likelihood of a dividend
decrease because dividend changes are dependent on changes in earnings.

25) Which of the following dividend policies will cause
dividends per share to fluctuate the most?
A) constant dividend payout ratio
B) stable dollar dividend
C) small, low, regular dividend plus a year-end extra
D) no difference between the various dividend policies

26) A firm that maintains a “stable dollar dividend
per share” will generally not increase the dividend unless
A) a stock split occurs.
B) the firm merges with another profitable firm.
C) the firm is sure that a higher dividend level can be
maintained.
D) the P/E ratio has increased steadily over the past 5
years.

27) The problem with the constant dividend payout ratio is
A) investors may come to expect a specified amount.
B) the dollar amount of the dividend fluctuates from year
to year.
C) management is reluctant to cut the dividend even if
there are low profits that year.
D) management cannot decrease the dividend when times are
tough.

28) You are a retired worker whose income is derived from
your company pension plan and social security. However, you are highly
dependent upon the income generated from your 401(k) plan, which is heavily
weighted in stocks that pay substantial dividends. Which of the following
dividend policies would you prefer?
A) constant dividend payment ratio
B) stable dollar dividend per share
C) small, regular dividend plus a year-end extra
D) any of the above would be equally desirable

29) Which of the following is (are) false?
A) The constant dividend payout ratio policy seeks to pay a
constant percentage of earnings each year.
B) The stable dollar dividend per share policy seeks to
maintain a relatively stable percentage dividend over time.
C) The small, regular dividend plus a year-end extra policy
pays a small, regular dividend plus a year-end extra dividend in good years.
D) The constant dividend payout ratio policy will result in
more variability in dividends than the stable dollar dividend per share policy.

30) AFB Corp. Declared a $1.00 dividend on January 5th, with an
ex-dividend date of January 19th, a record date of January 21st, and a
payment date of March 15th. Doug purchased AFB stock on January 6th.
A) Doug will not receive the dividend because he purchased
the stock after the declaration date.
B) Doug will not receive the dividend because he purchased
the stock prior to the record date.
C) Doug will receive the dividend if he still sells his stock
on January 20th because he owned the stock on the ex-dividend date.
D) Doug will receive the dividend if he still owns the
stock on January 21st, even if he sells the stock before the payment date.

31) Plantain, Inc. declared a dividend of $1 per share on
March 1. The ex-dividend date is March 15th, and the payment date is April 1st. The most
likely record date is
A) February 27th.
B) March 17th.
C) March 13th.
D) March 29th.

32) DAS, Inc. declared a $0.50 per share dividend on June
1. The date of record is June 20th, the ex-dividend date is June 18th, and the
payment date is June 31st. Andre owns a share of stock on June 1. Andre sells his share
to Brett on June 19th, and Brett sells the share to LaMarcus on June 29th. Who will receive the dividend?
A) Andre
B) Brett
C) LaMarcus
D) no one, since the share was not owned consistently by
one person over the period

33) EveningFall, Inc. pays a quarterly dividend of $3.40
per share. Which of the following statements is most accurate concerning which
shareholders will receive the dividend payment?
A) The shareholders who own the stock on the date the
dividend is declared will receive the dividend, even if they sell their stock
before the dividend checks are mailed.
B) The shareholders who are identified as owning the stock
on the record date will receive the dividend, even if they sell their stock
before the dividend checks are mailed.
C) The shareholders who own the stock the day the dividend
is paid will receive the dividend.
D) All shareholders who own the stock on the record date,
but sell the stock before the dividend checks are mailed, forfeit their right
to receive the dividend and the money reverts back to the corporation.

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