1. Kate purchased 500 shares of Fast Deliveries stock on Wednesday, July 7th. Te

Question

1. Kate purchased 500 shares of Fast Deliveries stock on Wednesday, July 7th. Ted purchased 100 shares of Fast Deliveries stock on Thursday, July 8th. Fast Deliveries declared a dividend on June 20th to shareholders of record on July 12th and payable on August 1st. Which one of the following statements concerning the dividend paid on August 1st is correct given this information? A. Neither Kate nor Ted is entitled to the dividend. B. Kate is entitled to the dividend but Ted is not. C. Ted is entitled to the dividend but Kate is not. D. Both Ted and Kate are entitled to the dividend. E. Both Ted and Kate are entitled to one-half of the dividend amount. 2. Which one of the following statements correctly applies to U.S. industrial firms based on the period of 1984 -2004? A. Earnings growth rates tend to lag dividend growth rates. B. Dividends tend to fluctuate significantly from quarter to quarter. C. The percentage of these firms paying dividends in 2004 was higher than in 1984. D. The total amount of dividends paid by these firms was greater in 2004 than in 1984. E. Non-dividend paying firms in 1984 were more apt to commence paying regular dividends than to implement a stock repurchase program. 3. Which of the following balance sheet accounts are affected by a small stock dividend? I. cash II. common stock III. retained earnings IV. capital in excess of par value A. I and III only B. II and III only C. II and IV only D. II, III, and IV only E. I, II, III, and IV 4. Which two of the following are the best justifications for a reverse stock split? I. combine a reverse stock split with a stock repurchase to enable a firm to go dark II. increase the respectability of the stock III. avoid delisting IV. reduce transaction costs for shareholders A. I and II only B. I and III only C. II and III only D. II and IV only E. III and IV only 5. A firm wants to maintain a minimum stock price of $15 a share. Due to a recent market downturn, the stock is currently selling for $6 a share. The firm should consider a: A. 3-for-1 stock split. B. 4-for-1 stock split. C. 1-for-3 reverse stock split. D. 1-for-4 reverse stock split. E. 1-for-5 reverse stock split.

Explanation / Answer

C.Ted is entitled to the dividend but Kate is not. B. Dividends tend to fluctuate significantly from quarter to quarter B. II and III only C. II and III only C. 1-for-3 reverse stock split.

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