4. CapitalStructure
Dividend Policy — Quiz
Test your understanding of dividend policy with 5 practice questions.
Practice Questions
Question 1
A company has a current stock price of $120$ and announces a $3$ for $2$ stock split. Assuming no other market changes, what will be the approximate new stock price per share after the split?
Question 2
Which of the following best describes the 'signaling hypothesis' in the context of dividend policy?
Question 3
A company's board of directors announces a stock repurchase program. Which of the following is a primary motivation for this action when management believes the stock is undervalued?
Question 4
According to the 'bird-in-hand' theory of dividend policy, why do investors prefer current dividends over future capital gains?
Question 5
A company has a net income of $3,000,000$ and $1,500,000$ shares outstanding. If the company repurchases $300,000$ shares, what will be the new earnings per share (EPS), assuming net income remains constant?