Drawback of cash dividends

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Reference no: EM132068738

1) M&N stock is currently selling for $22 per share. The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $26 per share. What type of offer is being made?

Rights offer

Secondary issue

Targeted repurchase

Tender offer

Private issue

2) JTL has 148,000 shares of stock outstanding. The firm has extra cash so it announced this morning that it is willing to repurchase 18,000 of its shares. What type of offer is the firm making?

Rights offer

Secondary issue

Targeted repurchase

Tender offer

Private issue

3) Which one of the following is a drawback of cash dividends?

Firms may have to obtain additional external financing which would not be required in the absence of the dividends.

Stock prices tend to increase as annual dividend amounts increase.

Cash dividends support stock prices.

Dividends tend to lower agency costs.

Dividend-paying firms tend to attract a wider field of investors than do non-dividend-paying firms.

4) Jessica currently owns 500 shares of Alpha stock valued at $19 share. What will her investment in Alpha be worth if the company declares a 4-for-3 stock split?

$6,075

$9,500

$11,000

$7,125

$8,800

Reference no: EM132068738

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