Exact Questions Exam 3

Which of the following is the most common dividend payout policy?

Stable dividend policy

Which of the following is true as it pertains to who tends to benefit from mergers?

Acquirers tend to underperform in the long run.

Vertical and hostile merger

A merger between companies in the same supply chain where management is against the deal

Which of the following is not a value motive?

Technology

Which of the following is true about dividends?

Dividends can reduce agency problems

If cash dividends and repurchases are financed the same way, what happens?

All of the above (Reduces assets, reduces equity, disburses cash the same way)

What is the effect of dividend payout ratio and yield on stock splits?

No effect

Which is not a motive for a share repurchase?

Decreasing financial leverage

What happens to dividends when earnings volatility increases and a company has a tax credit?

Dividends are likely to decrease, and are not likely to increase the level

Which theories imply dividends affect firm value?

All of the above (Bird in the Hand, Tax argument)

Which of the following closed loopholes in the Clayton Act?

Celler-Kefauver Act

Which is true about acquirer payment behavior in mergers?

Acquirers want to minimize payment and avoid paying more than pre-merger value plus synergies

Most mergers are paid in what form?

Cash and securities

Which is true about dividend-paying firms over time?

The proportion of dividend-paying companies is decreasing

Which measure evaluates the effect of a merger?

HHI (Herfindahl-Hirschman Index)