Multiple Choice
Identify the letter of the choice that best
completes the statement or answers the question.
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1.
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Asha
Aviation has generated positive net earnings for the past three years. The company feels that
it is in the best interest of the shareholders to re-invest earnings into future projects. The
firm’s dividend policy is an example of: a. | Stable dollar dividend policy | b. | Passive residual dividend policy | c. | No dividend policy | d. | Constant payout ratio dividend
policy | | |
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2.
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The
following is NOT an example of legal constraints that would prohibit a firm from making dividend
payments: a. | Capital impairment
restriction | b. | Net earnings
restriction | c. | Management
restriction | d. | Insolvency
restriction | | |
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3.
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In
Canada, an individual in the highest tax bracket would most likely prefer which income
source: a. | Interest from
debentures | b. | Dividends from
preferred shares | c. | Dividends from common shares | d. | Capital gains from common shares | | |
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4.
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On June
1st Canadian Mercantile declared a dividend of $0.20 for shareholders on record as of June
30th. The payment date is July 31st. The settlement period for
shares on the Toronto Stock Exchange is 2 days. What is the ex-dividend date for Canadian
Mercantile’s shares? a. | June 1th | b. | June 28th | c. | June 30th | d. | July 29th | | |
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5.
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Which
of the following is NOT considered a signal by management: a. | Firm begins to make dividend
payments | b. | Firm declares
regular quarterly dividend payments | c. | Firm reduces dividend payment | d. | Firm declares special annual
dividend | | |
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