Exam (elaborations) MBA MKT640

MBA MKT 640 / MKT640 STOCK SPLIT Question 1 An optimal trading range was first studied in 1934. At this time the optimal trading range was (e.g. “x to y”). 30 to 60 30 – 60 30-60 Question 2 If a firm utilized stock options for management compensation investors would likely prefer a firm to engage in _____ since this will _____ once options were exercised. stock splits - prevent dilution stock splits - increase dilution stock repurchases - prevent dilution stock repurchases - increase dilution Question 3 If a firm is interested in retaining capital they can _____ . implement a stock split implement a reverse stock split issue a special dividend halt dividend payments Question 4 If a firm is seeking to increase their number of shared outstanding they can implement a ____ or a stock split. reverse stock split stock dividend regular dividend special dividend Question 5 A firm may initiate a _____ if it desired to move their stock price ____ and _____. (choose 2) repurchase – down – decrease trading stock split – down – increase trading reverse stock split – up – increase trading dividend – down – increase trading Question 1 A reason to initiate a repurchase, stock split, or reverse stock split would be for a firm to _____. move their stock price into an optimal trading range increase a firm’s stock price decrease a firm’s stock price distribute excess earnings Question 2 If a firm is interested in retaining capital they can _____ . implement a stock dividend implement a reverse stock split issue a liquidating dividend implement a stock split Question 3 Some countries prohibit _____ due to the potential of _____. reverse stock splits – agency conflict repurchases – hostile takeovers stock splits – agency conflict repurchases - market manipulation Question 4 If a firm utilized stock options for management compensation investors would likely prefer a firm to engage in _____ since this will _____ once options were exercised. dividends - prevent dilution stock repurchases - prevent dilution stock splits - increase dilution stock repurchases - increase dilution Question 5 While a regular dividend will result in _____ a stock dividend _____. a tax shelter - will not produce a tax shelter a tax event - will produce a tax event no change on stock outstanding – will result in a decrease a tax event - will not produce a tax event Question 6 A firm may initiate a _____ if it desired to move their stock price ____ and _____. (choose 2) stock split – down – increase trading repurchase – down – increase trading stock split – down – decrease trading repurchase – down – decrease trading Question 7 A _____ will act to ____ the stock price. (choose 2) stock split- decrease stock dividend - increase stock dividend - decrease stock split- increase Question 8 A reverse stock split may be _____ since _____ may view this as _____. encouraged – investors - sustainable growth encouraged – the market – sustainable growth discouraged – investors - artificial growth discouraged – the market - sustainable growth Question 1 Which of the following is not a common stock repurchase method for publically traded firms? Buy shares from ESOP plans Repurchase shares by direct negotiations Buy a fixed number of shares at a fixed price Buy shares in the open market at the market price Question 2 If a firm is interested in retaining capital they can _____ . implement a stock dividend implement a stock split issue a liquidating dividend implement a reverse stock split Question 3 An investor who owns 80 shares valued at $80 a share will realize a stock price equal to once a 10% stock dividend is issued. (round to the hundredth) $72.73 Question 4 While a regular dividend will result in _____ a stock dividend _____. no change on stock outstanding – will result in an increase a tax event - will produce a tax event no change on stock outstanding – will result in a decrease a tax shelter - will not produce a tax shelter Question 5 The market will tend to react positively to a _____ and negatively to a ______. stock dividend – stock split repurchase – reduction in dividends reduction in dividends - repurchase reverse stock split - stock split Question 1 If a firm is interested in retaining capital they can _____ . implement a stock split implement a reverse stock split halt dividend payments issue a special dividend Question 2 If a firm is seeking to increase their number of shared outstanding they can implement a ____ or a stock split. public offering special dividend repurchase regular dividend Question 3 While a regular dividend will result in _____ a stock dividend _____. a tax event - will produce a tax event a tax shelter - will not produce a tax shelter no change on stock outstanding – will result in an increase no change on stock outstanding – will result in a decrease Question 4 Some countries prohibit _____ due to the potential of _____. stock splits - market manipulation repurchases – hostile takeovers repurchases - market manipulation stock splits – agency conflict Question 5 An investor who owns 80 shares valued at $80 a share will realize a stock price equal to once a 10% stock dividend is issued. (round to the hundredth) $72.73 Question 6 The market will tend to react positively to a _____ and negatively to a ______. reverse stock split - stock split stock dividend – repurchase stock split - reverse stock split stock dividend – stock split Question 7 If a firm is the subject of a hostile takeover a _____ may prove an appropriate defense. repurchase stock dividend reverse stock split stock split Question 8 A reverse stock split may be _____ since _____ may view this as _____. discouraged – the market - artificial growth discouraged – the market - sustainable growth encouraged – investors - sustainable growth encouraged – the market – sustainable growth Question 1 A _____ will act to ____ the stock price. (choose 2) stock split- increase stock dividend - increase stock dividend - decrease stock split- decrease stock dividend - decrease stock split- decrease Correct View solution Question 2 If a firm is the subject of a hostile takeover a _____ may prove an appropriate defense. special dividend stock split repurchase stock dividend repurchase Correct View solution Question 3 Some countries prohibit _____ due to the potential of _____. repurchases - market manipulation repurchases – hostile takeovers stock splits – agency conflict stock splits - market manipulation repurchases - market manipulation Correct View solution Question 4 While a regular dividend will result in _____ a stock dividend _____. a tax shelter - will not produce a tax shelter no change on stock outstanding – will result in a decrease a tax event - will not produce a tax event a tax event - will produce a tax event a tax event - will not produce a tax event Correct View solution Question 5 The market will tend to react positively to a _____ and negatively to a ______. repurchase – reduction in dividends reverse stock split - stock split reduction in dividends - repurchase stock dividend – repurchase repurchase – reduction in dividends Correct View solution Question 6 Which of the following is not a common stock repurchase method for publically traded firms? Buy a fixed number of shares at a fixed price Buy shares in the open market at the market price Buy shares from ESOP plans Repurchase shares by direct negotiations Buy shares from ESOP plans Correct View solution Question 7 If a firm is interested in retaining capital they can _____ . issue a liquidating dividend halt dividend payments implement a reverse stock split implement a stock split halt dividend payments Correct View solution Question 8 If a firm is interested in altering their D/E ratio they can engage in a ______. regular dividend stock split stock repurchase stock dividend stock repurchase Correct