Practice Test

Q1) Dividend policy determines Show Answer

Q2) Dividend constitutes the cash flow that accrues to - Show Answer

Q3) Which of the following factor will affect the dividend policy of the firm? 1. Insuf Eciency of cash. 2. Firms contractual obligation. 3. Ratio of debt to equity. 4. Business cycle considerations. Select the correct answer from the options given below. Show Answer

Q4) Retained earnings are Show Answer

Q5) In retention growth model, per cent of net income firms usualiy pay out as shareholders dividends, is classified as Show Answer

Q6) Which of the following is an argument for the relevance of dividends? Show Answer

Q7) As per Modigliani-Miller hypothesis of dividend irrelevance price of share at year zero is Show Answer

Q8) All of the following are true of stock splits except: Show Answer

Q9) Which of the following techniques does not reward shareholders for investing in a company? Show Answer

Q10) Forecast by analysts, retention growth model and historical growth rates are methods used for an - Show Answer

Q11) The repurchase fit stock is considered ............... decision rather them ............... decision. Show Answer

Q12) If OML Corporation buyback ten per cent of its outstanding common stock from the secondary market, the result would be - Show Answer

Q13) Historical growth rates, analysis forecasts and retention growth model are approaches to estimate: Show Answer

Q14) The primary goal of a publicly-owned firm interested in serving its stockholders should be to Show Answer

Q15) A decrease in a firm's willingness to pay dividends is likely to result from an increase in its - Show Answer

Q16) Payout ratio is subtracted from one to calculate - Show Answer

Q17) Which of the following would not have an influence on the optimal dividend policy? Show Answer

Q18) A stock split will cause a change in the total amounts shown in which of the following balance sheet accounts? Show Answer

Q19) You currently own 100 shares of stock in Baba Ltd. The stock currently trades at Rs.120 a share. The company is contemplating a 2:1 stock split. Which of the following best describes your position after the proposed stock split takes place? Show Answer

Q20) Consider following two statements: (1) Buyback can be used by companies to defend against hostile takeovers since they increase the proportion of debt in a firm's capital structure. (2) After a 3-for-1 stock split, a company's price per share will fall and its number of shares outstanding will rise total value remaining the same. Which of the above statement is correct? Show Answer

Q21) The dividend growth model can be used to compute the cost of equity for a firm in which of the following situations? I. Firms that have a 100% retention ratio. II. Firms that pay a constant dividend. III. Firms that pay an increasing dividend. IV. Firms that pay a decreasing dividend. Select correct answer from the options given below. Show Answer

Q22) If markets are in equilibrium, which of the following will occur: Show Answer

Q23) Regular Dividend Policy means - Show Answer

Q24) Which of the following examples best represents a passive dividend policy? Show Answer

Q25) Modigliani and Miller argue that the dividend decision ............... . Show Answer

Q26) Constant payout ratio means - Show Answer

Q27) Dividend policy is determined by the - Show Answer

Q28) How you calculate Dividend Cover Ratio? Show Answer

Q29) Investors may be willing to pay a premium for stable dividends because of the informational content of ............... , the desire of investors for ............... , and certain ............... Show Answer

Q30) EPS ratio measures - Show Answer

Q31) A ............... is a payment of additional shares to shareholders in lieu of cash. Show Answer

Q32) Which of the following is correct formula to calculate P/E Ratio? Show Answer

Q33) A ............... occurs when there is an increase in the number of shares outstanding by reducing the par value of stock. Show Answer

Q34) The P/E ratio reflects - Show Answer

Q35) A ............... is the expected cash dividend that is normally paid to shareholders. Show Answer

Q36) Myron Gordon believe that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that Show Answer

Q37) ......................... is a non-recurring dividend paid to share holders in addition to the regular dividend. Show Answer

Q38) In the real world, we find that dividends - Show Answer

Q39) What method of stock repurchase occurs when the buyer purchases securities through a brokerage house? Show Answer

Q40) What method of stock repurchase occurs when the buyer seeks bids within a specified price range and accepts the lowest price that will allow it to acquire the entire block of securities desired? Show Answer

Q41) Which of the following is correct formula to calculate dividend payout ratio? Show Answer

Q42) The shareholders of your firm anticipate receiving a regular dividend that is consistent with past dividend policies. What benefit occurs to shareholders if the firm repurchases shares with the same total quantity of money that would have been spent on dividends? Assume that the P/E ratio is maintained with either scenario. Show Answer

Q43) Dividend payout ratio - Show Answer

Q44) A dividend reinvestment plan (DRIP) is - Show Answer

Q45) Which of the following is correct formula to calculate dividend yield ratio? Show Answer

Q46) Which of the following is not a reason that DeStore. com would prefer to pay a stock dividend rather than a regular cash dividend? Show Answer

Q47) Some ratios are given below: I. EPS. II. P/E Ratio. III. Net Profit Ratio. IV. DPS. V. Dividend Yield Ratio. Which of the above ratio can be classified as market test ratio? Show Answer

Q48) The ............... is the proportion of earnings that are paid to common shareholders in the form of a cash dividend. Show Answer

Q49) All of the following statements are true regarding ratios that analyze a stock investment except ............... Show Answer

Q50) The dividend payout ratio describes: Show Answer

Q51) Which of the following factors is most likely to explain why a company decides to increase its annual dividend? Show Answer

Q52) Company J and Company K each recently reported the same EPS. Company J's stock, however, trades at a higher price. Which of the following statements is most correct? Show Answer

Q53) Which of the following statements lends most support to the theory that dividend payments are irrelevant to the value of ordinary shares? Show Answer

Q54) Which of the following is market test ratio? Show Answer

Q55) Which of the following statements is consistent with dividend irrelevance theory? Show Answer

Q56) While calculating dividend cover for preference shares numerator should be taken as ............... Show Answer

Q57) Which of the following statements about the dividend growth model are true? 1. The model prices shares on the basis of the present value of expected future dividends. 2. The model relies on the ability to predict a constant future growth rate for dividend payments. 3. The dividend growth model can accommodate future changes in shareholder's required rate of return. Select the correct answer from the options given below. Show Answer

Q58) ................................ reflects the market's confidence in the company's equity. Show Answer

Q59) 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? Show Answer

Q60) ..................... is a good measure of the dividend policy of the company. Show Answer

Q61) Which of the following statement is correct? Show Answer

Q62) As per provisions of the Companies Act, 2013, dividend can be paid - 1. Out of current profit. 2. Out of revaluation reserve. 3. Out of profits of previous financial years. 4. Out of money provided by the Central or State Government. 5. Out of free reserve. Select the correct answer from the options given below. Show Answer

Q63) As per Section 128 of the Companies Act, 2013, a company may, before the declaration of any dividend in any financial year, transfer ............... to the reserves of the company. Show Answer

Q64) As per Rule 7 of the Companies (Declaration & Payment of Dividend) Rules, 2014, in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfilment of the condition that rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the immediately preceding that year. Show Answer

Q65) As per Rule 7 of the Companies (Declaration & Payment of Dividend) Rules, 2014, in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfilment of the condition that total amount to be drawn from such accumulated profits shall not exceed ............... as appearing in the latest audited financial statement. Show Answer

Q66) As per Rule 7 of the Companies (Declaration & Payment of Dividend) Rules, 2014, in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus Subject to the fulfilment of the condition the balance of reserves after such withdrawal shall not fall below ............... as appearing in the latest audited financial statement. Show Answer

Q67) As per the provisions of the Companies Act, 2013, the amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in a separate account within ............... from the date of declaration of such dividend. Show Answer

Q68) After declaration of dividend, the company has to pay dividend within ............... of declaration of dividend. If amount of dividend remains unpaid or unclaimed for 30 days of declaration of dividend, then in next the company has to transfer the amount unclaimed to the to a special account in any scheduled bank to be called the "Unpaid Dividend Account". Show Answer

Q69) The shareholders may desire that their dividends be credited directly to their bank account. The request will be made in a form duly filled and sent to the company. This is known as - Show Answer

Q70) According to ............... , dividend policy is strictly a financing decision. Show Answer

Q71) Professor James E. Walter has developed a theoretical model which shows the relationship between - Show Answer

Q72) As per Walter's Model in case of growth firm - Show Answer

Q73) ................................suggests that the market price of share is the present value of future dividends. Show Answer

Q74) As per Grodon's Model payout ratio is irrelevant in case of - Show Answer

Q75) How market price will be calculated by using dividend growth model? Show Answer

Q76) Consider following two statements: (I) A company with large portion of inside ownership, all of whom are high-income individuals. (II) A growth company with an abundance of good investment opportunities. For each of the company described above, would you expect it to have a high or low dividend payout ratio? Show Answer

Q77) Consider following two statements: (I) A company is experiencing ordinary growth and has high liquidity and much unused borrowing capacity. (II) A company with volatile and high business risk. For each of the company described above, would you expect it to have a high or low dividend payout ratio? Show Answer

Q78) If you are calculating market price by using Gordon's Model, increasing payout ratio other things renaming the same will - Show Answer

Q79) As per Gordon's Model whether company adopts 50%, 80% or any other payout ratio, market price will remain same when - Show Answer

Q80) If you are calculating market price by using dividend growth method ie. Dj H- (Ke - g) increase in growth rate leads to - Show Answer

Q81) Company A and Company B both calculates their market price by using Walter's formula. Both companies will have same market price if - Show Answer

Q82) As per Walter's Model when Ra < Rc increase in dividend payout ratio will lead to - Show Answer

Q83) As per Walter's Model when Ra < Rc decrease in retention ratio will lead to - Show Answer

Q84) As per Walter's Model when Ra = Rc market price will remain same when - Show Answer

Q85) As per Walter's Model when Ra > Rc increase in dividend payout ratio will lead to - Show Answer

Q86) As per Walter's Model when Ra > Rc decrease in retention ratio will lead to - Show Answer

Q87) Which of the following is correct formula to calculate market price as per MM Model? Show Answer

Q88) As per MM Model total value of firm remains same whether it declares dividend or not. You are required to state if dividend is declared the market price per share as per MM Model - Show Answer

Q89) Which one of the following is a non-cash payment made by a firm to its shareholders that dilute the value of each share of stock outstanding? Show Answer

Q90) Market price = Rs. Show Answer

Q91) The date by which a shareholder must be recorded as the share owner in order to receive a declared dividend is called the: Show Answer

Q92) The target payout ratio is: Show Answer

Q93) The difference between the highest and lowest prices at which a stock has sold is called the stock's: Show Answer

Q94) Which one of the following statements concerning cash dividends is correct? Show Answer

Q95) The fact that flotation costs can be significant is justification for: Show Answer

Q96) When a firm is short of cash yet it wishes to distribute something to shareholders, it should consider - Show Answer

Q97) A company wants to buy back stock. How will this impact the company and its stock? Show Answer

Q98) Which of the following would ultimately give the greatest benefit to stockholders? Show Answer

Q99) Required return X Retention Ratio = Rs. Show Answer

Q100) The shares of company are selling at Rs. 45 per share. The firm had paid dividend @ Rs. 4.5 per share last year. The estimated growth of the company is approximately 5% per year. Determine the estimated market price of the equity share if the anticipated growth rate of the firm rises to 8%. Show Answer

Q101) The shares of company are selling at Rs. 90 per share. The firm had paid dividend @ Rs. 9 per share last year. The estimated growth of the company is approximately 5% per year. Determine the estimated market price of the equity share if the anticipated growth rate of the firm falls to 3%. Show Answer

Q102) Details regarding A Ltd. are given below: Ee = Rs. 24; K = 11%; r = 12%. If retention ratio is 80%, market price as per Gordon's Model is - Show Answer

Q103) Details regarding B Ltd. are given below: Ee = Rs. 24; K = 13.20%; r = 14.40%. If retention ratio is 50%, market price as per Gordon's Model is - Show Answer

Q104) Details regarding C Ltd. are given below: E = Rs. 14.4; Ke = 7.92%; r = 8.64%. If retention ratio is 90%, market price as per Gordon's Model is - Show Answer

Q105) Following details are available for G Ltd.: E = Rs. 22; Ke = 12.10%; r = 12.10%. alculate the value of equity shares when retention ratio is (a) 50% (b) 80% (c) 90%. Show Answer

Q106) Market price per share of WX Ltd. is Rs. 400 per share at 50% retention ratio as per Gordon's Model. The firms cost of equity is below required rate of return. If the firm increases retention ratio - Show Answer

Q107) A large chemical company has been expected to grow at 14% per year for next 4 years and then to grow indefinitely at the same rate as national economy ie. 5%. The required rate of return on equity share is 12%. Assume that company paid a dividend of Rs. 2 per share last year (D0 = 2). Determine the market price of the shares today. Show Answer

Q108) The required rate of return of investors is 15%. ABC Ltd. declared and paid annual dividend of Rs. 4 per share. It is expected to grow @ 20% for the next 2 years and 10% thereafter. Compute the price at which the shares should sell. PV Factors: @15% for Year 1 = 0.8696 and Year 2 = 0.7561. Show Answer

Q109) Anurag has invested in a share whose dividend is expected to grow @15% for 5 years and thereafter @ 5% till life of the company. Find out the value of the share, if current dividend is Rs. 4 per share and investors required rate of return is 6%. Show Answer

Q110) The cost of capital and rate of return on investment of GOD Ltd. is 10% and 15% respectively. The company has 10 lakh shares of Rs. 10 each. Its earnings per share is Rs. 7.5. Calculate the value of the firm per share using Walter's Model assuming all earnings are distributed as dividend. Show Answer

Q111) Cost of capital of MNL Ltd. is less than rate of return on investment. Its market price per share is Rs. 62.50 as per Walter's Model at 50% retention ratio. If firm increase its retention ratio then - Show Answer

Q112) EPS of Kalki Ltd. is Rs. 20. Its cost of capital is 16%. Internal rate of return on investment is 20% and retention ratio is 50%. What is the market price per share of Kalki Ltd. as per dividend growth model? Show Answer

Q113) EPS of Don Ltd. is Rs. 15. Its cost of capital is 16%. Internal rate of return on investment is 20% and retention ratio is 40%. What is the market price per share of Don Ltd. as per Walter's Model? Show Answer

Q114) Following details are available for PQR Ltd.: Earnings per share Rs. 27.5; Cost of capital 16%; Internal rate of return on investment 20%; Retention ratio 50%. Calculate the price per share as per Walter's Model. Show Answer

Q115) Following details are available for PQR Ltd.: Earnings per share Rs. 27.5; Cost of capital 16%; Internal rate of return on investment 20%; Retention ratio 60%. Calculate the price per share as per Walter's Model. Show Answer

Q116) Khemka Ltd. paid dividend per share of Rs. 3, Rs. 3.6, Rs. 4.32, Rs. 5.18 & Rs. 6.22 for last five year. What is the expected dividend for next year? Show Answer

Q117) Following details are available to you for Beauty Ltd.: Internal rate of return 15%; Capitalization rate 15%; Earnings per share 712; Cash dividend per share 75; Calculate the value of an equity share. Show Answer

Q118) Rama Ltd. had 1,00,000 equity shares of 710 each outstanding. Shares are currently being quoted at par in the market. In the wake of the removal of the dividend restraint, the company now intends to pay a dividend of 72 per share for the current financial year. It belongs to a risk class whose appropriate capitalization rate is 15%. Using MM Model and assuming no taxes, ascertain the price of the company's shares as it is likely to prevail at the end of the year - (i) when dividend is declared; and (it) when no dividend is declared. Show Answer

Q119) Rosa Ltd. has outstanding 1,20,000 shares selling at 720 per share. The company hopes to make a net income of 73,50,000 during the year. Company is thinking of paying a dividend of 72 per share at the end of current year. Capitalization rate has been estimated to be 15%. On the basis of MM model how many new shares the company must issue if the dividend is paid and company needs 79,50,000 for an approved investment expenditure? Show Answer

Q120) Take the data of above question and calculate total market value of the company. Show Answer

Q121) Abhishek Steel Ltd. has one lakh equity shares outstanding which are selling at Rs. 100 each. Its capitalization rate is 14%. The company is expecting 765 lakh income for the current year and is planning to pay dividend amounting to 74 lakh. The company wants to invest in a new project which will cost 775 lakh. It is assumed that the MM Model on dividend policy is applicable. Compute the number of shares to be issued for financing when: A. Dividend is not paid. B. Dividend amounting to 74 lakh is paid. Show Answer

Q122) Small Events Incorporation has recently paid dividend of 73.50 per share. The dividends are growing at 10% p.a. and the equity capitalization rate applicable to the company is 12%. Find out the implicit P/E Ratio if the EPS of the company is 77. Show Answer

Q123) Current price of share of X Ltd. is 760 and just paid dividend per share is 74. If the capitalization rate is 12%, what is the dividend growth rate? Show Answer

Q124) Following information is available in respect of Hajela Ltd.: No. of shares outstanding : 3 lakh; Net profit : 18 lakh; Equity capitalization rate : 16%; Rate of return on investment : 20%. You are required to calculate Dividend payout ratio to keep share price at 742. Show Answer

Q125) Market price is 730 per share. Dividends are growing at 2%. Cost of equity is 10.5%. How much dividend must have been paid by the company at the beginning of the year or last year? Show Answer

Q126) Dividend policy determines what portion of earnings will be paid out to stock holders and what portion will be retained in the business to finance long-term growth Show Answer

Q127) Dividend constitutes the cash flow that accrues to ..................... Show Answer

Q128) Retained earnings is not the source of funds for financing the corporate growth. Show Answer

Q129) Higher dividend means less retained earnings and vice versa. Show Answer

Q130) Type of dividend policy can be : Show Answer

Q131) In .....................,the investors get dividend at usual rate Show Answer

Q132) In ......................payment of certain sum of money is regularly made to the shareholders Show Answer

Q133) Merits of regular dividend policy are: Show Answer

Q134) Stable dividend policy can be : Show Answer

Q135) As per ....................., the company does not pay regular dividend to the shareholders Show Answer

Q136) Dividend policy is determined by: Show Answer

Q137) Determinants/constraints of dividend policy include: Show Answer

Q138) Needs of the Company for additional capital affects the dividend policy Show Answer

Q139) Dividend can be in the form of: Show Answer

Q140) If the dividend is paid in the form of cash to the shareholders, it is called ..................... Show Answer

Q141) Which of the following approach is not the part of relevant theory of dividend Show Answer

Q142) Which approach is based on this formula: D+2/l(E-D)
Where:
P: market price per share of common stock D: dividend per share E: earnings per share r: return on investment k: market capitalization rate.
Show Answer

Q143) According to Walter’s Model, the optimum dividend policy depends on the relationship between the firm’s internal rate of return and Show Answer

Q144) According to Walter’s Model, If return on investment (r) > market capitalisation rate (k) then firm should ..................... Show Answer

Q145) If return on investment(r) > market capitalisation rate (k) then firm is referred to as: Show Answer

Q146) If return on investment (r) < market capitalisation rate (k) then firm is referred to as: Show Answer

Q147) If return on investment (r) = market capitalisation rate (k) then firm is referred to as: Show Answer

Q148) According to Walter, the optimum payout ratio is : Show Answer

Q149) Walter’s model is based on the following assumptions: Show Answer

Q150) Given that:
r = return on investment is given as 0.12
k = market capitalization rate is as 0.10
E = earnings per share is Rs. 4/-
D = dividend per share is Rs. 21-
Then, the market price per share as per Walter’s Model would be:
Show Answer

Q151) Which approach is based on this formula:
P - E(1-b)/ke-br
Show Answer

Q152) Gordon’s Model is also known as: Show Answer

Q153) According to Gordon, when r>ke the price per share increases as the dividend payout ratio Show Answer

Q154) Determine the market price of a share of LMN Ltd. as per Gordon’s Model, given
ke = 11%
E = Rs 20 r = 12% b= 90%
Show Answer

Q155) Determine the market price of a share of LMN Ltd. as per Gordon’s Model, given
ke = 11 %
E = Rs.20
r = 12%
b= 60%
Show Answer

Q156) Determine the market price of a share of LMN Ltd. as per Gordon’s Model, given
ke = 11%
E = Rs. 20 r= 10% b= 90%
Show Answer

Q157) Determine the market price of a share of LMN Ltd. as per Gordon’s Model, given
ke = 11%
E = Rs. 20
r = 12%
b = 60%
Show Answer

Q158) As per .....................,the manner in which earnings are divided into dividends and retained earnings does not affect this value. Show Answer

Q159) Assumptions under M-M hypothesis includes: Show Answer

Q160) X company earns Rs. 5 per share, is capitalised at a rate of 10 per cent and has a rate of return on investment of 18 per cent. According to Walter’s model, what should be the price per share at 25 per cent dividend payout ratioRs. Show Answer

Q161) In the above question, what is the the optimum payout ratio according to Walter Rs. Show Answer

Q162) In the above question, calculate the price based on the optimum payout ratio as per Walter Rs. Show Answer

Q163) A company has the following facts:
Cost of capital (ke) = 0.10
Earnings per share (E) = Rs. 10
Rate of return on investments (r) = 8%
Dividend payout ratio: 50%
What is the market price of the shares.
Show Answer

Q164) . A company has the following facts:
Cost of capital (ke) = 0.10
Earnings per share (E) = Rs. 10
Rate of return on investments (r) = 8%
Dividend payout ratio: 25%
What is the market price of the shares
Show Answer

Q165) Determination of value of shares, given the following data:
D/P Ratio = 40%
Retention Ratio = 60%
Cost of capital = 17%
R= 12%
EPS = Rs. 20
Show Answer

Q166) Determination of value of shares, given the following data:
D/P Ratio = 30%
Retention Ratio = 70%
Cost of capital = 18%
R= 12%
EPS = Rs. 20
Show Answer

Q167) From the following information supplied to you, determine the theoretical market value of equity shares of a company as per Walter’s model:
Earnings of the company: Rs. 5,00,000
Dividends paid : Rs. 3,00,000
Number of shares outstanding = Rs. 1,00,000
Price earnings ratio = 8
Rate of return on investment = 0.15
Show Answer

Q168) In the above question, are you satisfied with the current dividend policy of the firm ? Show Answer

Q169) In question no. 42, what should be the optimal dividend payout ratio ? Show Answer

Q170) Find Market Price Per Share (MPS) at the end of the current year if dividend is paid as per MM approach Show Answer

Q171) Find the number of shares to be issued for financing the new project if dividend is paid as per MM approach Show Answer

Q172) . Find Market Price Per Share (MPS) at the end of the current year if dividend is not paid as per MM approach Show Answer

Q173) Find the number of shares to be issued for financing the new project if dividend is not paid as per MM approach Show Answer

Q174) X Company Ltd., has 1,00,000 shares outstanding the current market price of the shares Rs. 15 each. The company expects the net profit of Rs. 2,00,000 during the year and it belongs to a rich class for which the appropriate capitalisation rate has been estimated to be 20%. The company is considering dividend of Rs. 2.50 per share for the current year. What will be the price of the share at the end of the year if the dividend is paid Show Answer

Q175) X Company Ltd., has 1,00,000 shares outstanding the current market price of the shares Rs. 15 each. The company expects the net profit of Rs. 2,00,000 during the year and it belongs to a rich class for which the appropriate capitalisation rate has been estimated to be 20%. The company is considering dividend of Rs. 2.50 per share for the current year. What will be the price of the share at the end of the year if the dividend is not paid Show Answer

Q176) Dividend payout ratio is : Show Answer

Q177) A payment of either cash or stock out of a corporation's earnings to a firm's owners is called Show Answer

Q178) In Walter model formula D stands for Show Answer

Q179) In MM model MM stands for... Show Answer

Q180) What are the earnings per share (EPS) for a company that earned Rs. 100,000 last year in after-tax profits, has 200,000 common shares outstanding and Rs. 1.2 million in retained earning at the year end ? Show Answer

Q181) .....................and .....................carry a fixed rate of interest and are to be paid off irrespective of the firm’s revenues. Show Answer

Q182) How are earnings per share calculated Rs.. Show Answer

Q183) Which of the following is NOT a cash outflow for the firm ? Show Answer

Q184) Dividend payout ratio refers to that portion of total earnings which is distributed among shareholders. Show Answer

Q185) Walters model supports the view that dividend is relevant for value of the firm. Show Answer

Q186) Gordon's model suggests that dividend payment does not affect the market price of the share. Show Answer

Q187) MM model deals with irrelevance of dividend decision Show Answer

Q188) MM model asserts that value of the firm is not affected whether the firm pays dividend or not Show Answer

Q189) Walter's Model suggests that a firm can always increase i.e. of the share by Show Answer

Q190) MM Model argues that dividend is irrelevant as Show Answer

Q191) A share of common stock has just paid a dividend of Rs 2.00.If the expected long-run growth rate for this stock is 15 percent, and if investors required a 19 percent rate of return, what is the price of the stock ? Show Answer

Q192) A share of common stock has just paid a dividend of Rs. 2.00. If the expected long-run growth rate for this stock is 20 percent and if investors require a 23 percent rate of return, what is the price of the stock ? Show Answer

Q193) A share of common stock has just paid a dividend of Rs 5.00 If the expected long-run growth rate for this stock is 10 percent, and if investors require a 20 percent rate of return, what is the price of the stock ? Show Answer

Q194) A payment made out of a firm's earnings to its owners in the form of either cash or stock is called a : Show Answer

Q195) An increase in the number of shares outstanding which does not affect owners' equity is called a : Show Answer

Q196) Which one of the following is a non cash payment made by a firm to its shareholders that dilutes the value of each share of stock outstanding ? Show Answer

Q197) The residual theory of dividends suggests that dividends are ___ to be the value of the firm. Show Answer

Q198) According to the residual theory of dividends, if the firm's equity need is less than the amount of retained earnings, the firm would : Show Answer

Q199) According to the residual theory of dividends, if the firm's equity need is less than the amount of retained earnings, the firm would : Show Answer

Q200) The dividend policy must be formulated considering two basic objectives, namely : Show Answer

Q201) The problem with a constant payout ratio dividend policy from the shareholder's perspective is that : Show Answer

Q202) The problem with the regular dividend policy from the firm's perspective is that Show Answer

Q203) The advantage of using the low-regular and extra dividend policy is that Show Answer

Q204) A stock split has __ effect on the firm's capital structure. Show Answer

Q205) ___ and ___ carry a fixed rate of interest and are to be paid off irrespective of the firm's revenues. Show Answer

Q206) In walter model formula D stands for Show Answer

Q207) In MM model, MM stands for : Show Answer

Q208) The earning per share of a company is Rs 10. It has an internal rate of return of 15% and the capitalisation rate of risk class is 12.5%. if Walter's model is used- what should be the optimum payout ratio of the firm ? Show Answer

Q209) The earning per share of a company is Rs 10. It has an internal rate of return of 15% and the capitalisation rate of risk class is 12.5%. if Walter's model is used- what would be the price of a share at the optimum payout ratio ? Show Answer

Q210) Compute the price per share at the end of the current year when dividend amounting to Rs 4 lakh is paid Show Answer

Q211) Compute the number of shares to be issued for financing the investment when dividend amounting to Rs 4 lakh is paid Show Answer

Q212) Compute the price per share at the end of the current year when dividend is not paid : Show Answer

Q213) Compute the number of shares to be issued for financing the investment when dividend is not paid : Show Answer

Q214) Net profit before tax of Acumen Ltd. is Rs 17,50,000.The company has 1,00,000 equity shares@ 30% applies to the company. Compute the P/E ratio for the company Show Answer

Q215) Residual theory of dividend policy states that dividend is purely a financing activity and dividend needs to be paid as per the residual available. Show Answer

Q216) Dividend decision does not constitute important decisions which a finance manager has to take ? Show Answer

Q217) Dividend policy has to be adapted in the light of : Show Answer

Q218) Factors including include : Show Answer

Q219) What will be the price of share at the end of 31st March, 2009, if the dividend is paid ? Show Answer

Q220) What will be the price of share a the end of 31st March, 2009, if the dividend is not paid ? Show Answer

Q221) How many new shares the company must issue if the dividend is paid and company needs Rs 9,50,000 for an approved investment expenditure during the year ? Show Answer

Q222) Compute the price per share at the end of the current year when dividend is paid : Show Answer

Q223) Compute the number of shares to be issued for financing the investment when dividend is paid Show Answer

Q224) Compute the price per share at the end of the current year when dividend is not paid : Show Answer

Q225) Compute the number of shares to be issued for financing the investment dividend is not paid : Show Answer

Q226) The earning per share of a company is Rs 20. It has an internal rate of return of 15% and the capitalisation rate of risk class is 12.5%. If Walter's model is used. What should be the optimum payout ratio of the firm ? Show Answer

Q227) The earning per share of a company is Rs 20. It has an internal rate of return of 15% and the capitalisation rate of risk class is 12.5%. If Walter's model is used.
What would be the price of a share at the optimum payout ratio ? Show Answer

Q228) XYZ Ltd has 25,000 outstanding shares at current market price of Rs 100. It belongs to a risk class with capitalisation rate of 20%. The company expects to earn a net profit of Rs 5,00,000 during a year. What will be the price of share if dividend is not paid ? Show Answer

Q229) The dividends are not cumulative for equity shareholders, that is, they cannot be accumulated and distributed in the later years. Show Answer

Q230) Which of the following is not a cash outflow of the firm ? Show Answer

Q231) Dividend policy should consider the state in which the industry is, as the overall scenario has a direct impact on the performance of the firm and consequently its earning capacity. Show Answer

Q232) Dividend policy has to be adapted in the light of nature and environment of firm, industry and the economy. Show Answer

Q233) Following are the forms of dividend Show Answer

Q234) Dividend policy is - Show Answer

Q235) Dividends are earnings for shareholders and they expect reasonable earnings from their - Show Answer

Q236) When a company is not in a position to distribute dividend in cash due to liquidity then the company can - Show Answer

Q237) Stock dividend is known as - Show Answer

Q238) When a company has surplus reserves but does not have adequate liquidity the company capitalises its- Show Answer

Q239) When a company has surplus reserves but does not have adequate liquidity the company capitalises its reserves and distributes these reserves as - Show Answer

Q240) When a company gives an option to its shareholders to receive dividend either in cash or kind, then it is called - Show Answer

Q241) If a company is a closed held then it can - Show Answer

Q242) If the earning of company are stable then it can easily follow - Show Answer

Q243) If the company will need more and more resources in future for expansion and diversification then ___ of dividend will suit the company. Show Answer

Q244) Which of the dividend policy is long term policy of dividend distribution where frequent changes are not made ? Show Answer

Q245) Under which policy management of the company keeps dividend rate stable ? Show Answer

Q246) Under which policy company management does not fix a stable rate of dividend but a stable payout ratio fixed ? Show Answer

Q247) Walter's model is related with - Show Answer

Q248) Gorden's model is related with - Show Answer

Q249) The term ___ refers to that part of profits of a company which is distributed by the company among its shareholders. Show Answer

Q250) Taxation policy of the government does not affect the dividend decision of the firm. Show Answer

Q251) Dividend policy is affected by : Show Answer

Q252) Dividend policy of the firm affects the : Show Answer

Q253) When r = 12% and b = 90% Show Answer

Q254) When r= 12% and b = 60% Show Answer

Q255) When r = 12% and b = 30% Show Answer

Q256) When r = 11% and b = 90% Show Answer

Q257) When r = 11% and b = 60% Show Answer

Q258) When r = 11% and b = 30% Show Answer

Q259) When r = 10% and b = 90% Show Answer

Q260) When r = 10% and b = 60% Show Answer

Q261) When r = 10% and b = 30% Show Answer

Q262) XYZ Ltd earns Rs 10 per share. Capitalization rate and return on investment are 10% and 12% respectively. The optimal dividend payout ratio ans share price. Show Answer

Q263) XYZ Ltd earns Rs 10 per share. Capitalization rate and return on investment are 10% and 12% respectively. The optimal dividend payout ratio is 25% then the share price will be - Show Answer

Q264) XYZ Ltd earns Rs 10 per share. Capitalization rate and return on investment are 10% and 12% respectively. The optimal dividend payout ratio is 50% then the share price will be - Show Answer

Q265) XYZ Ltd earns Rs 10 per share. Capitalization rate and return on investment are 10% and 12% respectively. The optimal dividend payout ratio is 75% then the share price will be - Show Answer

Q266) XYZ Ltd earns Rs 10 per share. Capitalization rate and return on investment are 10% and 12% respectively. The optimal dividend payout ratio is 100% then the share price will be - Show Answer

Q267) Calculate the share price using Gordon model when dividend payout ratio is 25% Show Answer

Q268) Calculate the share price using Gordon model when dividend payout ratio is 50% Show Answer

Q269) Calculate the share price using Gordon model when dividend payout ratio is 25% Show Answer

Q270) XYZ is a company having share capital of Rs 10 lakhs of Rs 10 each. It distribute current dividend of 20% per annum. Annual growth rate in dividend expected is 2%. The expected rate of return on its equity capital is 15%/ Calculate price of share using Gordon growth model. Show Answer

Q271) Which one of the following is the assumption of Gordon's model ? Show Answer

Q272) What should be the optimum dividend payout ratio, when r = 15% and Ke = 12% Show Answer

Q273) Which of the following is an irrelevance theory ? Show Answer

Q274) If the company's D/P ratio is 60% and ROI is 16%, what should be the growth rate ? Show Answer

Q275) If the shareholders prefer regular income, how does this affect the dividend decision ? Show Answer

Q276) Mature companies having new investment opportunities will show high payout ratios, this statement is : Show Answer

Q277) What is the value of a levered firm L if it has the same EBIT as an unlevered firm U, (with value of 700 lakh), and has a debt of Rs 200 lakh, tax rate is 35% under MM approach ? Show Answer

Q278) What is the value of a unlevered firm U if it has the same EBIT as an unlevered firm L, (with value of 700 lakh), and has a debt of Rs 200 lakh, tax rate is 35% under MM approach ? Show Answer

Q279) According to the traditional approach, what is the effect of increase in degree of leverage on the valuation of the firm ? Show Answer

Q280) According NOI approach, with increases in debt/equity ratio the financial risk of equity holders Show Answer

Q281) Walter's model suggests for 100% DP ratio when Show Answer

Q282) If a firm has ke < r, the Walter's model suggests for : Show Answer

Q283) Walter's model suggests that a firm can always increase the value of the share by Show Answer

Q284) 'bird in hand' argument is given by Show Answer

Q285) Dividend irrelevance argument of MM model is based on Show Answer

Q286) Which of the following is not true for MM model ? Show Answer

Q287) Which of the following stresses on investor's preference for current dividend than higher future capital gains ? Show Answer

Q288) MM model of dividend irrelevance uses arbitrage between Show Answer

Q289) If Ke = r, then under Walter's model, which of the following is irrelevant ? Show Answer

Q290) MM model argues that dividend is irrelevant as Show Answer

Q291) Which of the following represents passive dividend policy ? Show Answer

Q292) In case of Gordon's model, the MP for zero payout is zero. It means that Show Answer

Q293) Gordon's model of dividend relevance is same as Show Answer

Q294) If r = ke, the MP by Walter's model and Gordon's model or different payout ratios would be Show Answer

Q295) In MM Model with taxes, where 'r' is the interest rate, 'D' is the total debt and 't' is tax rate, then present valued shields would be : Show Answer

Q296) Dividend irrelevance argument of MM model is based on : Show Answer

Q297) Which of the following is not true for MM Model ? Show Answer

Q298) Which of the following stresses on invetor's preference reorient dividend than higher future capital gains ? Show Answer

Q299) MM Model of dividend irrelevance uses arbitrage between Show Answer

Q300) If ke = r, then under Walter's Model, which of the following is irrelevant ? Show Answer

Q301) MM Model argues that dividend is irrelevant as Show Answer

Q302) Which of the following represents passive dividend policy ? Show Answer

Q303) In case of Gordon's Model, the MP for zero payout is zero. It means that Show Answer

Q304) If 'r' = 'ke', then MP by Walter's Model and Gorden's Model for different payout ratios would be Show Answer

Q305) Dividend payout ratio is Show Answer

Q306) Dividend declared by a company must be paid in Show Answer

Q307) Dividend distribution Tax is payable by Show Answer

Q308) Shares of face value of Rs 10 are 80% paid up. The company declares a dividend of 50%. Amount of dividend per share is Show Answer

Q309) Which of the following generally not result in increase in total dividend liability ? Show Answer