This quiz works best with JavaScript enabled. Home > Finance > Corporate Finance > Dividend Policy – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Dividend Policy Quiz 5 (23 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Financial scholars discuss changes in dividend policy mainly to understand A) Whether it can affect the company's market layout. B) Whether it can affect the company's tax burden. C) Whether it can affect the company's marketing plan. D) Whether it can affect the company's value. E) All of the above. Show Answer Correct Answer: D) Whether it can affect the company's value. 2. If a company provides same percentage of dividend each year, it is known as ..... A) Fixed Dividend. B) Fluctuating Dividend. C) Residual Dividend. D) None of above. Show Answer Correct Answer: B) Fluctuating Dividend. 3. Which of the following is an argument for the relevance of dividends? A) Informational content. B) Reduction of uncertainty. C) Some investors' preference for current income. D) All of the above. Show Answer Correct Answer: D) All of the above. 4. Closely held companies shareholders prefer to obtain less or no dividends, and retaining the earnings within the company. A) No. B) Yes. Show Answer Correct Answer: B) Yes. 5. Modigliani and Miller argue that the dividend decision A) Is relevant as the value of the firm is not based just on the earning power of its assets. B) Is irrelevant as dividends represent cash leaving the firm to shareholders, who own the firm anyway. C) Is relevant as cash outflow always influences other firm decisions. D) Is irrelevant as the value of the firm is based on the earning power of its assets. Show Answer Correct Answer: D) Is irrelevant as the value of the firm is based on the earning power of its assets. 6. What is the impact of dividend policy on shareholder confidence and decision-making? A) Dividend policy has no impact on shareholder confidence and decision-making. B) Dividend policy only affects the company's expenses. C) Dividend policy can influence shareholder confidence and decision-making by reflecting the company's financial stability, potential for growth, and overall performance. D) Dividend policy leads to a decrease in shareholder confidence and decision-making. Show Answer Correct Answer: C) Dividend policy can influence shareholder confidence and decision-making by reflecting the company's financial stability, potential for growth, and overall performance. 7. Retained earnings (RE) are A) Not important when determining dividends. B) The same as cash in the bank. C) An indication of a company's liquidity. D) The cumulative earnings of the company after dividends. Show Answer Correct Answer: D) The cumulative earnings of the company after dividends. 8. In Q.2 what is Market price of Equity share when dividend payout is 10 % A) 300. B) Not able to solve. C) Zero. D) Unrealistic value so not possible to calculate as assumption of Gordon is not fulfilled. Show Answer Correct Answer: D) Unrealistic value so not possible to calculate as assumption of Gordon is not fulfilled. 9. Which one of the following increases the number of shares outstanding but does not increase thevalue of owner's equity? A) Stock repurchase. B) Stock split. C) Cash distribution. D) Reverse stock split. Show Answer Correct Answer: B) Stock split. 10. Extending the MM capital structure theory, the company's dividends have an impact on the company's value. A) Significant. B) None. C) Depends on the company's capital structure. D) All of the above. E) None of the above. Show Answer Correct Answer: B) None. 11. A stock dividend A) Increases the value of shareholders equity. B) Does not change the value of shareholders equity. C) None of these. D) None of above. Show Answer Correct Answer: B) Does not change the value of shareholders equity. 12. Meow Bhd gives RM0.50 per share in dividends. At the end of the financial year, they stated extra earnings and plan to distribute ii as an additional dividend of RM0.05. But the problem is, the company don't want to increase the dividend amount to RM0.55, worries that it will not be able to afford a similar increase in the future. Which one of the following would you suggest for distributing the RM0.05? A) Extra cash dividend. B) Regular cash dividends. C) Liquidating dividend. D) Special cash dividend. Show Answer Correct Answer: D) Special cash dividend. 13. Which of the below will NOT happen if a stock split is done by a company A) Price decrease. B) Price increase. C) Stock decrease. D) None of above. Show Answer Correct Answer: B) Price increase. 14. A dividend is a distribution of part of the earnings of the company to its equity shareholders. A) No. B) Yes. Show Answer Correct Answer: B) Yes. 15. On which one of the following dates is the determination made as to which shareholders willreceive a dividend payment? A) Ex-dividend date. B) Declaration date. C) Payment date. D) Date of record. Show Answer Correct Answer: D) Date of record. 16. A debt equity ratio of 1, 5 implies ..... A) For every 1, 5 collected in debt there is 1 collected through equity. B) For every 1 collected in debt there is 0, 5 collected through equity. C) For every 1 collected in debt there is 1, 5 collected through equity. D) For every 0, 5 collected in debt there is 1 collected through equity. Show Answer Correct Answer: A) For every 1, 5 collected in debt there is 1 collected through equity. 17. In the process of handling an IPO, the services provided by underwriters in my country to securities issuance companies mainly include: A) Issuance consultation and formulation of issuance procedures. B) Counseling application. C) Placing securities to investors. D) All of the above. E) None of the above. Show Answer Correct Answer: D) All of the above. 18. All of the following are true of stock splits EXCEPT: A) Market price per share is reduced after the split. B) The number of outstanding shares is increased. C) Retained earnings are changed. D) Proportional ownership is unchanged. Show Answer Correct Answer: C) Retained earnings are changed. 19. Small Investors and retired workers prefer to have cash dividend. A) No. B) Yes. Show Answer Correct Answer: B) Yes. 20. What is the Value of the Dividend Payout Ratio? A) 16%. B) 42%. C) 27%. D) 39%. Show Answer Correct Answer: D) 39%. 21. The sources of funds for long-term investment of enterprises can be roughly divided into? A) Initial public offering; capital increase issuance. B) Bank loan; bond. C) Ordinary shares; special shares. D) Internal financing; external financing. E) None of the above. Show Answer Correct Answer: D) Internal financing; external financing. 22. ..... Dividend promises to pay shareholders at future date A) Scrip. B) Property. C) Cash. D) None of above. Show Answer Correct Answer: A) Scrip. 23. Which of the following examples best represents a passive residual dividend policy? A) The firm sets a policy such that the proportion of dividends paid from net profit remains constant. B) The firm pays dividends with what remains of net profit after taking acceptable investment projects. C) The firm sets a policy such that the quantity (dollar amount per share) of dividends paid from net profit remains constant. D) All of the above are examples of various types of passive residual dividend policies. Show Answer Correct Answer: B) The firm pays dividends with what remains of net profit after taking acceptable investment projects. ← PreviousRelated QuizzesFinance QuizzesDividend Policy Quiz 1Dividend Policy Quiz 2Dividend Policy Quiz 3Dividend Policy Quiz 4Capital Structure QuizWorking Capital Management Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books