University of Louisiana, Lafayette - FNAN 522 Module 6 Homework. Latest 2022
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Course
FNAN 522
Institution
University Of Louisiana, Lafayette
Started on Monday, 2 December 2019, 3:15 PM State Finished Completed on Monday, 2 December 2019, 3:21 PM Time taken 5 mins 56 secs Marks 15.00/15.00 G rade 20.00 out of 20.00 (100%) A company made $10 million in revenue, recorded $2 million in net income, and paid $750,000 in dividends last year. W...
FNAN522-020_860-202020
Started on Monday, 2 December 2019, 3:15 PM
State Finished
Completed on Monday, 2 December 2019, 3:21 PM
Time taken 5 mins 56 secs
Marks 15.00/15.00
Grade 20.00 out of 20.00 (100%)
Question 1 A company made $10 million in revenue, recorded
Correct $2 million in net income, and paid $750,000 in
dividends last year. What was the company's pay
m
Mark 1.00 out of
er as
out ratio last year?
1.00
co
eH w
Select one:
o.
a. 7.5%
rs e
ou urc
b. 20.0%
c. 37.5%
o
d. 2.7%
aC s
vi y re
Question 2 In which of the following situations would a
shareholder prefer to receive stock dividends as
ed d
Correct
opposed to cash dividends?
ar stu
Mark 1.00 out of
1.00
Select one:
sh is
a. Cash dividends and stock sales are both
taxed using capital gain rates.
Th
b. The investor wants to minimize the taxes
due on investment income.
c. The investor is looking to own shares in the
company for a long period of time.
d. All of these answers
, Question 3 The Modigliani-Miller theory suggests that it
Correct doesn't matter to a shareholder whether a
company issues dividends. Why might that theory
Mark 1.00 out of
not be applicable to the US stock market as it
1.00
currently exists?
Select one:
a. Dividends and share repurchases are taxed
at different rates.
b. There are transaction costs associated with
trading stock.
c. All of these answers.
d. Changes in dividend policy may indicate a
change in the company's investment policy.
m
er as
co
eH w
Question 4 Which of the following is a possible market
o.
Correct
rs e
reaction to an stock repurchase announcement?
ou urc
Mark 1.00 out of
Select one:
1.00
a. The stock price may increase because the
o
repurchase signals that the company views
aC s
the shares as currently undervalued.
vi y re
b. The share price may increase because the
repurchase signals that the company is
ed d
shifting to a higher degree of leverage to
ar stu
maximize returns to shareholders.
c. All of these answers.
sh is
d. The stock price may fall because the
repurchase signals that the company's future
Th
earnings may not be as high as the market
currently expects.
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