This quiz works best with JavaScript enabled. Home > Corporate Finance > Dividend Policy – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Dividend Policy Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A(n) ..... occurs when there is an increase in the number of shares outstanding by reducing the par value of stock. A) Stock split. B) Stock dividend. C) Regular dividend. D) Extra dividend. Show Answer Correct Answer: A) Stock split. 2. Which of the following is the information contained in the company's operating plan? A) Company resources-capital, employees, technology, plants and equipment. B) Products. C) Market. D) All of the above. E) None of the above. Show Answer Correct Answer: D) All of the above. 3. Dividends can be in the form of ..... A) Cash, stock dividend, property. B) Debt, account receivable, earnings. C) Retained earnings and stock split. D) Financing, investment, operating. Show Answer Correct Answer: A) Cash, stock dividend, property. 4. In Q.1 of test paper what is MP of share in (i) A) 240. B) 220. C) 200. D) None of these. Show Answer Correct Answer: B) 220. 5. The larger the DPR, the smaller the dividend given A) Correct. B) Salah. Show Answer Correct Answer: B) Salah. 6. The company is undergoing capital structure reorganization, and borrowing is the company's financial leverage. A) To lower. B) Improve. C) Break up. D) Avoid. E) None of the above. Show Answer Correct Answer: B) Improve. 7. In Q.2 what is Market price of Equity share when dividend payout is 25 % A) Rs. 50. B) Rs. 37.50. C) Rs. 150. D) None of these. Show Answer Correct Answer: C) Rs. 150. 8. Which one of the following is the date on which the board of directors agrees to pay a dividendand passes a resolution to do so? A) Date of record. B) Ex-dividend date. C) Payment date. D) Declaration date. Show Answer Correct Answer: D) Declaration date. 9. The employees of the company decides the dividend amount to be paid out to the shareholders. A) Yes. B) No. Show Answer Correct Answer: B) No. 10. A ..... occurs when there is an increase in the number of shares out-standing by reducing the par value of stock. A) Stock Split. B) Stock dividend. C) Extra dividend. D) Regular dividend. Show Answer Correct Answer: A) Stock Split. 11. Dividend payout ratio is equal to A) Dividend per share divided by EPS. B) Dividend per share divided by current price per share. Show Answer Correct Answer: A) Dividend per share divided by EPS. 12. The policy of distributing small dividends at the beginning and not providing additional dividends when the company is making a loss is the meaning of..... A) . Constant Dividend Payout Ratio. B) Constant or Steadily Increasing Dividend. C) Low Reguler Dividend plus Extra. D) Residual Dividend Policy. Show Answer Correct Answer: C) Low Reguler Dividend plus Extra. 13. Vincent Handsome Sdn Bhd has announced a semiannual dividend of RM0.08 per share. This 2nd half of the year, the company plans to pay an additional RM0.02 per share. Which one of the following is the best description of the additional RM0.02 that is being paid this 2nd half of the year? A) Regular cash dividend. B) Extra cash dividend. C) Special cash dividend. D) Liquidating dividend. Show Answer Correct Answer: B) Extra cash dividend. 14. Chimi has 100, 000 shares of stock outstanding that is currently selling at RM15 per share. If the company do a 5-for-2 stock split, what will be the price per share? A) RM6. B) RM37.50. C) RM35. D) RM52.50. Show Answer Correct Answer: A) RM6. 15. Dividend constitutes the cash flow that accrues to ..... A) Bond holder. B) Equity holder. C) Debt holder. D) Bank. Show Answer Correct Answer: B) Equity holder. 16. If a firm is dissolved, at the end of the process, a final dividend of any residual amount is made to the shareholders. This is known as a ..... A) Declaration date. B) Consolidation Dividend. C) Bird in the hand argument. D) Liquidating dividend. Show Answer Correct Answer: D) Liquidating dividend. 17. According to MM theory, an increase in corporate debt has no impact on the rate of return required by shareholders. A) True. B) Untrue. Show Answer Correct Answer: B) Untrue. 18. Explain the relevance of dividend policy in financial management. A) Dividend policy has no impact on the company's financial health or stability. B) Dividend policy is relevant in financial management as it affects the company's capital structure, stock price, and overall shareholder wealth. It also reflects the company's financial health and stability, and influences investor confidence and decision-making. C) Dividend policy only affects the company's expenses and has no impact on shareholder wealth. D) Dividend policy is irrelevant in financial management and does not influence investor confidence. Show Answer Correct Answer: B) Dividend policy is relevant in financial management as it affects the company's capital structure, stock price, and overall shareholder wealth. It also reflects the company's financial health and stability, and influences investor confidence and decision-making. 19. The following factors that influence dividend policy positively are..... A) Inflation. B) Liquidity. C) Funds needed by the company. D) None of above. Show Answer Correct Answer: B) Liquidity. 20. Ming Bing Metal Industry Sdn Bhd recently sold all of their metal copy machines. They plan to use the sales money to distribute it to their shareholders. This situation is BEST refers to ..... A) Regular cash dividend. B) Extra cash dividend. C) Special cash dividend. D) Liquidating dividend. Show Answer Correct Answer: D) Liquidating dividend. 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