This quiz works best with JavaScript enabled. Home > Finance > Corporate Finance > Dividend Policy – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Dividend Policy Quiz 1 (30 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 dividend. B) Stock split. C) Extra dividend. D) Regular dividend. Show Answer Correct Answer: B) 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) Payment date. B) Date of record. C) Declaration date. D) Ex-dividend date. Show Answer Correct Answer: C) Declaration date. 9. The employees of the company decides the dividend amount to be paid out to the shareholders. A) No. B) Yes. Show Answer Correct Answer: A) 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 dividend. B) Regular dividend. C) Stock Split. D) Extra dividend. Show Answer Correct Answer: C) 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) Residual Dividend Policy. B) Constant or Steadily Increasing Dividend. C) . Constant Dividend Payout Ratio. D) Low Reguler Dividend plus Extra. Show Answer Correct Answer: D) 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) Special cash dividend. B) Extra cash dividend. C) Regular 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) RM52.50. B) RM35. C) RM6. D) RM37.50. Show Answer Correct Answer: C) RM6. 15. Dividend constitutes the cash flow that accrues to ..... A) Debt holder. B) Bond holder. C) Equity holder. D) Bank. Show Answer Correct Answer: C) 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) Extra cash dividend. B) Liquidating dividend. C) Special cash dividend. D) Regular cash dividend. Show Answer Correct Answer: B) Liquidating dividend. 21. How does dividend policy affect the cost of capital for a firm? A) Dividend policy increases the cost of capital for a firm. B) Dividend policy only affects the firm's revenue, not the cost of capital. C) Dividend policy can affect the cost of capital by influencing investor perception of the firm's stability and growth potential. D) Dividend policy has no impact on the cost of capital. Show Answer Correct Answer: C) Dividend policy can affect the cost of capital by influencing investor perception of the firm's stability and growth potential. 22. Financial signaling has been raised as an argument in the battle over the relevancy of dividends. Which of the following statements concerning dividends is most likely to be voiced by someone using the financial signaling argument? A) Reported accounting earnings of a company, not dividends, are a proper reflection or signal of the company's economic earnings. B) Cash dividends speak louder than words when it comes to conveying information about management's expectations of the future. C) The price of a firm's stock should react unfavorably to an increase in dividends. D) A dividend decrease should be viewed by investors as "good news." The dividend decrease acts to add persuasion to the statement that the firm has better uses for the earnings of the company than the stockholders. Show Answer Correct Answer: B) Cash dividends speak louder than words when it comes to conveying information about management's expectations of the future. 23. Which of the following are sources of dividends? A) Current year's profit. B) Past year's profits. C) Money provided by government. D) All of the above. Show Answer Correct Answer: D) All of the above. 24. This one is not Mechanics of Cash Dividend Payments is ..... A) Holder of Record Date. B) Declaration Date. C) Stock Split. D) Payment Date. Show Answer Correct Answer: C) Stock Split. 25. The dividend-payout ratio is equal to A) Current share price divided by annual dividends per share. B) The dividend yield plus the capital gains yield. C) Total dividends divided by net profit. D) Total dividends divided by total ordinary shares issued. Show Answer Correct Answer: C) Total dividends divided by net profit. 26. Depending on the perception of uncertainty about future cash flows, the company may issue dividends A) Reduce company value. B) Increase company value. C) The company's value remains unchanged. D) Shareholder rebound. E) None of the above. Show Answer Correct Answer: B) Increase company value. 27. The clientele effect states that investors fall into various groups because of differences in theirpreferences for which one of the following? A) Dividends. B) Rate of returns. C) Risk level. D) Share price levels. E) Short term vs Long term investment. Show Answer Correct Answer: A) Dividends. 28. In addition to regular regular dividends, additional dividends are called A) Dividends and dividends. B) Special dividend. C) Additional dividends. D) All of the above. E) None of the above. Show Answer Correct Answer: B) Special dividend. 29. To apply for the initial listing of stocks, an important part of the application documents, called, must be distributed to relevant government units and investors. A) Operation plan. B) Investment plan. C) Marketing plan. D) Disclosure instructions. E) None of the above. Show Answer Correct Answer: D) Disclosure instructions. 30. 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 A) Interest. B) Distribution. C) Retained earning. D) Dividend. Show Answer Correct Answer: D) Dividend. Next →Related QuizzesFinance QuizzesDividend Policy Quiz 2Dividend Policy Quiz 3Dividend Policy Quiz 4Dividend Policy Quiz 5Capital Structure QuizWorking Capital Management Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books