#1
What is dividend policy?
A policy that determines how dividends are paid to shareholders
ExplanationDefines how dividends are distributed to shareholders.
#2
What is the clientele effect in dividend policy?
The theory that suggests investors prefer a consistent dividend payout
ExplanationInvestors favor stable dividend payments.
#3
Which financial ratio is NOT typically used in assessing dividend policy?
Current ratio
ExplanationCurrent ratio is not used for dividend policy.
#4
Which financial theory suggests that investors are indifferent between dividends and capital gains?
The dividend irrelevance theory
ExplanationStates investors are indifferent to dividends or capital gains.
#5
What is a dividend declaration date?
The date when the board of directors announces the upcoming dividend payment
ExplanationAnnouncement date for upcoming dividend payment.
#6
Which of the following factors influence dividend policy decisions?
All of the above
ExplanationMultiple factors influence dividend policy decisions.
#7
What is the relevance of the 'bird-in-hand' theory in dividend policy?
It suggests that investors prefer higher dividends due to uncertainty in capital gains
ExplanationInvestors favor higher dividends over uncertain capital gains.
#8
What is a dividend yield?
The total dividends paid divided by the number of outstanding shares
ExplanationDividends paid per share of outstanding stock.
#9
What is a stock dividend?
A dividend paid in the form of additional shares of stock
ExplanationDividend paid in additional shares rather than cash.
#10
What is the significance of the dividend policy for investors?
All of the above
ExplanationDividend policy affects various aspects for investors.
#11
What does the clientele effect suggest about dividend policy?
Companies should pay dividends to cater to the preferences of different investor groups
ExplanationFirms should adjust dividends for investor preferences.
#12
What is a dividend irrelevance theory?
A theory suggesting that dividend policy has no impact on a firm's value
ExplanationStates that dividend policy does not affect firm value.
#13
What is a dividend payout ratio?
The ratio of dividends paid to shareholders to the company's net income
ExplanationRatio of dividends to company net income.
#14
What is the difference between a cash dividend and a stock dividend?
Cash dividend is paid in cash, while stock dividend is paid in shares
ExplanationCash dividends are in money, stock dividends in shares.
#15
What is a dividend policy of 'residual dividend'?
A policy where dividends are paid from retained earnings after all project investments are made
ExplanationDividends paid from remaining earnings after investments.
#16
What is the effect of a high dividend payout ratio on a company's growth?
It hinders growth by reducing retained earnings available for reinvestment
ExplanationHigh ratio limits reinvestment for growth.
#17
What is a dividend discount model (DDM)?
A model used to calculate the present value of all future dividends
ExplanationCalculates present value of future dividends.