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Q: 1. Which of the following is the most valid reason to split a stock that has a market price of $110 per share? (Points : 1) Conserve cash. Reduce the market price to a more popular trading
range. Obtain additional capital. Increase investor's net worth. 2. The Modigliani and Miller hypothesis does not work in the "real world" because (Points : 1) interest expense is tax deductible, providing an advantage to debt financing. higher levels of debt increase the likelihood of bankruptcy, and bankruptcy has real costs for any corporation. both A and B. dividend payments are fixed and tax deductible for the corporation. 3. Based on the data contained in Table A, what is the break-even point in units produced and sold? TABLE A Average selling price per unit $18.00 Variable cost per unit $13.00 Units sold 400,000 Fixed costs $650,000 Interest expense $ 50,000 (Points : 1) 130,000 140,000 150,000 180,000 4. Dividend changes may be used by management as a credible communication tool to signal investors about future earnings under which of the following dividend policy theories? (Points : 1) the clientele effect the residual dividend theory the information effect the expectations theory 5. Moline Manufacturing Corporation reported the following items: Sales = $6,000,000; Variable Costs of Production = $1,500,000; Variable Selling and Administrative Expenses = $550,000; Fixed Costs = $1,350,000; EBIT = $2,600,000; and the Marginal Tax Rate =35%. Moline's break-even point in sales dollars is (Points : 1) $2,050,633. $2,197,500. $2,438,750. $2,785,000. 6. Bob's Baked Goods Company reported the following income statement for 2009: Sales $2,500,000 Variable Costs 900,000 Fixed Operating Costs 700,000 EBIT 900,000 Interest Expense 200,000 EBT 700,000 Taxes (30%) 210,000 Net Income $490,000 Earnings Per Share $4.90 If Bob's sales next year increase by 20%, Bob's EBIT will increase: (Points : 1) 20%, showing no operating leverage. 20%, showing no financial leverage. over 35%, due to operating leverage. over 35%, due to operating leverage and financial leverage. 7. The final approval of a dividend payment comes from (Points : 1) the controller. the president of the company. the board of directors. It is a joint decision requiring approval from all of the above. 8. Sweet Tooth Bakery bakes and sells pies. Sweet Tooth has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually. What is the break-even point in pies? (Points : 1) 190,440 280,000 200,000 110,000 9. JBC Corp. declared a dividend of $2 per share, which was an increase of 25% from the prior year, yet JBC Corp. stock declined by 3% the day of the announcement. RBG Corp. declared a dividend of $2 per share, which was the same as the prior year, and its stock increased in value by 2% on the day of the announcement. These events could be most readily explained by the (Points : 1) information effect. clientele effect. expectations theory. residual dividend theory. 10. Which of the following will result from a stock repurchase? (Points : 1) Earnings per share will rise. Number of shares will increase. Corporate cash is conserved. Ownership is diluted.
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Asked 2/19/2013 7:13:50 AM
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10. Which of the following will result from a stock repurchase? (Points : 1) Earnings per share will rise. Number of shares will increase. Corporate cash is conserved. Ownership is diluted.
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Updated 2/11/2016 2:40:47 PM
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Earnings per share will rise will result from a stock repurchase.
Added 2/11/2016 2:40:47 PM
This answer has been confirmed as correct and helpful.
Confirmed by Andrew. [2/11/2016 4:31:42 PM]
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