Payout Policy

Fundamentals of Corporate Finance, 2e (Berk)
Chapter 17 Payout Policy

17.1 Cash Distribution to Shareholders

2) The way a firm chooses between alternate uses of free cash flow is referred to as
A) retention ratio.
B) payout policy.
C) call policy.
D) debt policy.
Answer: B

3) The date on which the board of directors of a company authorizes the dividend is called the ________ date.
A) declaration
B) record
C) ex-dividend
D) distribution
Answer: A

4) The firm will pay the dividend to all shareholders of record on a specific date, set by the board, called the ________ date.
A) declaration
B) record
C) ex-dividend
D) distribution
Answer: B

5) The date two business days prior to the date on which all shareholders of record receive a payment is called the ________ date.
A) declaration
B) record
C) ex-dividend
D) distribution
Answer: C

6) The date on which a firm pays out dividends is called the ________ date.
A) declaration
B) record
C) ex-dividend
D) distribution
Answer: D

7) A one-time payment to shareholders that is much larger than a regular dividend is often referred to as a ________ dividend.
A) taxable
B) divesting
C) special
D) ex-day
Answer: C

8) Dividend payments that are the result of liquidation of assets are known as ________ and are taxed as capital gains.
A) return of capital
B) rolling dividends
C) alternate payments
D) private earnings
Answer: A

9) An alternate way to pay investors is when the firm uses cash to buy shares of its own outstanding stock, also known as
A) dividend investment.
B) retained earnings.
C) initial public offering.
D) share repurchases.
Answer: D

10) A firm may announce its intention to buy its own shares in the open market like any other investor, also known as a(n)
A) open market purchase.
B) tender offer.
C) targeted repurchase.
D) greenmail.
Answer: A

11) When a firm offers to buy its shares at a pre specified price during a short time