MCQ on Dividend Policy: Check the below Financial and Strategic Management MCQ on Dividend Policy with Answers Pdf free download. Financial and Strategic Management MCQ on Dividend Policy Questions for Financial and Strategic Management with Answers were prepared based on the latest exam pattern. We have provided Financial and Strategic Management MCQ on Dividend Policy with Answers to help students understand the concept very well. Students should practice CS Executive MCQ on Dividend Policy Questions with Answers based on the latest syllabus.

MCQ on Dividend Policy

1. Forecast by analysts, retention growth model and historical growth rates are methods used for an –
(A) Estimate future growth
(B) Estimate option future value
(C) Estimate growth ratio
(D) Estimate option present value

2. Historical growth rates, analysis forecasts, and retention growth model are approaches to estimate:
(A) the Net present value of gain
(B) Growth rate
(C) Growth gain
(D) Discounted gain

3. Dividend constitutes the cash flow that accrues to –
(A) Holders
(B) Equity holders
(C) Bondholders
(D) All of the above

4. The primary goal of a publicly-owned firm interested in serving its stockholders should be to
(A) Maximize expected total corporate profit
(B) Maximize expected EPS
(C) Maximize the stock price per share
(D) Maximize expected net income

5. The repurchase of stock is considered a decision rather than a decision.
(A) An investment; a financing
(B) Financing; an investment
(C) An investment; a dividend
(D) A dividend; a financing

6. Retained earnings are –
(A) An indication of a company’s liquidity
(B) The same as cash in the bank
(C) Not important when determining dividends
(D) The cumulative earnings of the company after dividends

7. The payout ratio is subtracted from one to calculate –
(A) Growth ratio
(B) Present value ratio
(C) Retention ratio
(D) Future value ratio

8. A decrease in a firm’s willingness to pay dividends is likely to result from an increase in its –
(A) Earnings stability
(B) Access to capital markets
(C) Profitable investment opportunities
(D) Collection of accounts receivable

9.

10. Which of the following would not have an influence on the optimal dividend policy?
(A) The possibility of accelerating or delaying investment projects
(B) A strong shareholders’ preference for current income versus capital gains
(C) The costs associated with selling new common stock
(D) All of the statements above can have an effect on dividend policy

11. A stock split will cause a change in the total amounts shown in which of the following balance sheet accounts?
(A) Cash
(B) Common stock
(C) Paid-in capital
(D) None of the above

12. In retention growth model, percent of net income firms usually payout as shareholders dividends, is classified as –
(A) Payout ratio
(B) Payback ratio
(C) Growth retention ratio
(D) Present value of the ratio

13. If you are calculating market price by using Gordon’s Model, increasing payout ratio other things renaming the same will –
(A) Increase the price per share
(B) Decrease the price per share
(C) Will not have any effect on the price of the share
(D) Price will remain constant

14. As per Gordon’s Model, whether the company adopts 50%, 80%, or any other payout ratio, the market price will remain the same when
(A) K_e > r
(B) K_e < r
(C) K_e = r
(D) K_e > R_f

15. If markets are in equilibrium, which of the following will occur:
(A) Each investment’s expected return should equal its realized return
(B) Each investment’s expected return should equal its required return
(C) Each investment should have the same realized return
(D) All of the statements above are correct

16. Which of the following is an argument for the relevance of dividends?
(A) Informational content
(B) Reduction of uncertainty
(C) Some investor’s preferences for current income
(D) All of the above

17. As per Walter’s Model when R_a < R_c increase in dividend payout ratio will lead to –
(A) Increase in market price
(B) Decrease in market price
(C) No change in market price
(D) None of the above

18. As per Walter’s Model when R = R market price will remain the same when –
(A) Retention ratio increases
(B) Retention ratio decreases
(C) Retention ratio increase or decreases
(D) None of the above

19. All of the following are true of stock splits except:
(A) Market price per share is reduced after the split
(B) The number of outstanding shares is increased
(C) Retained earnings are changed
(D) Proportional ownership is unchanged

20. Which of the following techniques does not reward shareholders for investing in a company?
(A) Repurchasing company shares
(B) Offering non-pecuniary benefits
(C) Making a rights issue
(D) Offering a scrip dividend

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