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Multiple Choice Quiz
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1

BDJ, Inc. has 31,000 shares of stock outstanding with a market price of $15 per share. If net income for the year is $155,000 and the retention ratio is 80%, what is the dividend per share on BDJ Inc.'s stock?
A)$0.68
B)$0.83
C)$1.00
D)$1.25
E)$1.89
2

BDJ, Inc. has 31,000 shares of stock outstanding with a market price of $15 per share. If net income for the year is $155,000 and the dividend per share is $2.00, what is the retention ratio for BDJ, Inc.?
A)21.6%
B)40.0%
C)60.0%
D)78.4%
E)83.2%
3

On January 2, 1997 the board of directors of DDT Inc. declared a dividend of $0.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. Under NYSE rules, if you bought 500 shares of DDT stock on Friday, January 4 for $7.50 per share, how much will you receive in dividends?
A)$0.00
B)$1.50
C)$37.50
D)$55.00
E)$375.00
4

The board of directors of DDT Inc. has declared a dividend of $0.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. Under NYSE rules, if you bought 500 shares of DDT stock on Friday, January 11 for $7.50 per share, how much will you receive in dividends?
A)$0.00
B)$1.50
C)$37.50
D)$55.00
E)$375.00
5

The board of directors of DDT Inc. declared a dividend of $0.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. You owned 500 shares of DDT on Wednesday, January 9 when the price was $7.50 per share. Under NYSE rules, if you sell your 500 shares of DDT Friday, January 11, what amount of money will you receive assuming the ONLY change in the price of the stock (if any) is due to the dividend?
A)$3,000
B)$3,375
C)$3,500
D)$3,750
E)$4,250
6

You own stock in a firm that has 1.25 million shares outstanding. The current stock price is $13.50 per share. If the company issues a 10% stock dividend, what would you expect the stock price to be after the dividend is paid?
A)$12.27 per share
B)$12.82 per share
C)$13.30 per share
D)$13.49 per share
E)$13.71 per share
7

You own stock in a firm that has 1.25 million shares outstanding. The current stock price is $13.50 per share. If the company does a 3 for 1 stock split, what would you expect the stock price to be after the split?
A)$3.67 per share
B)$4.33 per share
C)$4.50 per share
D)$13.50 per share
E)$40.50 per share
8

Lucky Mike's, Inc. has a target debt/equity ratio of 0.75. After-tax earnings for 1996 were $850,000 and the firm needs $1,150,000 for new investments. If the company follows a residual dividend policy, what dividend will be paid?
A)$0
B)$67,240
C)$192,857
D)$213,164
E)$862,500
9

JimGyms has the following quarterly earnings projections. The company retains 40% of its earnings and follows a cyclical dividend policy. What is the dividend for the 4th quarter? 1st quarter = -$25,000; 2nd quarter = $50,000; 3rd quarter = $175,000; 4th quarter = $115,000.
A)$31,000
B)$46,000
C)$65,000
D)$69,000
E)$105,000
10

JimGyms has the following quarterly earnings projections. The company retains 60% of its earnings and follows a stable dividend policy each year. What is the dividend for the 2nd quarter? 1st quarter = $650,000; 2nd quarter = $800,000; 3rd quarter = $550,000; 4th quarter = $1,000,000.
A)$220,000
B)$260,000
C)$300,000
D)$320,000
E)$400,000





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