FNAN 522 Mod 6with complete
verified solutions 2025
A company made $10 million in revenue, recorded $2 million in net
income, and paid $750,000 in dividends last year. What was the
company's pay out ratio last year?
Select one:
a.20.0%
b.7.5%
c.2.7%
d.37.5% - answer d.
37.5%
In which of the following situations would a shareholder prefer to
receive stock dividends as opposed to cash dividends?
Select one:
a.All of these answers
b.The investor is looking to own shares in the company for a long
period of time.
c.Cash dividends and stock sales are both taxed using capital gain
rates.
d.The investor wants to minimize the taxes due on investment
income. - answer b.The investor is looking to own shares in the
company for a long period of time.
The Modigliani-Miller theory suggests that it doesn't matter to a
shareholder whether a company issues dividends. Why might that
theory not be applicable to the US stock market as it currently
exists?
Select one:
a.Dividends and share repurchases are taxed at different rates.
, b.Changes in dividend policy may indicate a change in the
company's investment policy.
c.There are transaction costs associated with trading stock.
d.All of these answers. - answer ALL
a.Dividends and share repurchases are taxed at different rates.
b.Changes in dividend policy may indicate a change in the
company's investment policy.
c.There are transaction costs associated with trading stock.
d.All of these answers.
Which of the following is a possible market reaction to an stock
repurchase announcement?
Select one:
a.The stock price may fall because the repurchase signals that the
company's future earnings may not be as high as the market
currently expects.
b.The stock price may increase because the repurchase signals that
the company views the shares as currently undervalued.
c.All of these answers.
d.The share price may increase because the repurchase signals that
the company is shifting to a higher degree of leverage to maximize
returns to shareholders. - answer ALL
a.The stock price may fall because the repurchase signals that the
company's future earnings may not be as high as the market
currently expects.
b.The stock price may increase because the repurchase signals that
the company views the shares as currently undervalued.
c.All of these answers.
d.The share price may increase because the repurchase signals that
the company is shifting to a higher degree of leverage to maximize
returns to shareholders.
verified solutions 2025
A company made $10 million in revenue, recorded $2 million in net
income, and paid $750,000 in dividends last year. What was the
company's pay out ratio last year?
Select one:
a.20.0%
b.7.5%
c.2.7%
d.37.5% - answer d.
37.5%
In which of the following situations would a shareholder prefer to
receive stock dividends as opposed to cash dividends?
Select one:
a.All of these answers
b.The investor is looking to own shares in the company for a long
period of time.
c.Cash dividends and stock sales are both taxed using capital gain
rates.
d.The investor wants to minimize the taxes due on investment
income. - answer b.The investor is looking to own shares in the
company for a long period of time.
The Modigliani-Miller theory suggests that it doesn't matter to a
shareholder whether a company issues dividends. Why might that
theory not be applicable to the US stock market as it currently
exists?
Select one:
a.Dividends and share repurchases are taxed at different rates.
, b.Changes in dividend policy may indicate a change in the
company's investment policy.
c.There are transaction costs associated with trading stock.
d.All of these answers. - answer ALL
a.Dividends and share repurchases are taxed at different rates.
b.Changes in dividend policy may indicate a change in the
company's investment policy.
c.There are transaction costs associated with trading stock.
d.All of these answers.
Which of the following is a possible market reaction to an stock
repurchase announcement?
Select one:
a.The stock price may fall because the repurchase signals that the
company's future earnings may not be as high as the market
currently expects.
b.The stock price may increase because the repurchase signals that
the company views the shares as currently undervalued.
c.All of these answers.
d.The share price may increase because the repurchase signals that
the company is shifting to a higher degree of leverage to maximize
returns to shareholders. - answer ALL
a.The stock price may fall because the repurchase signals that the
company's future earnings may not be as high as the market
currently expects.
b.The stock price may increase because the repurchase signals that
the company views the shares as currently undervalued.
c.All of these answers.
d.The share price may increase because the repurchase signals that
the company is shifting to a higher degree of leverage to maximize
returns to shareholders.
