Tareas

42. The purpose of a stock split is to
(a) affect the firm’s capital structure.
(b) decrease the dividend.
(c) enhance the trading activity of the stock by lowering the market price.
(d) increase the market price of the stock.
Answer: C
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Splits

43. A stock split has _________ effect on the firm’scapital structure.
(a) little
(b) no
(c) a measurable
(d) a detrimental
Answer: B
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Splits

44. The purpose of a reverse stock split is to
(a) issue additional shares.
(b) increase the dividend.
(c) increase the price of stock.
(d) reduce trading activity.
Answer: C
Level ofDifficulty: 3
Learning Goal: 6
Topic: Stock Splits

45. The accounting in a stock split will transfer funds
(a) from the Common Stock and Paid in Capital accounts to the Retained Earnings account.
(b) from the Retained Earnings account to the Paid in Capital account.
(c) from the Paid in Capital account to the Retained Earnings account.
(d) from the Retained Earningsaccount to the Preferred Stock account.
(e) None of the above.
Answer: E
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Splits
46. Stock repurchases are made for all of the following reasons EXCEPT
(a) to obtain shares to be used in acquisition.
(b) to retire outstanding issues.
(c) to have shares available for stock option plans.
(d) to decreasethe book value of equity.
Answer: D
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Repurchases

47. When common stock is repurchased and retired, the underlying motive is to
(a) delay taxes.
(b) boost the stock’s dividends.
(c) distribute the excess cash to the owners.
(d) reduce the retained earnings balance.
Answer: C
Level of Difficulty:3
Learning Goal: 6
Topic: Stock Repurchases

48. The repurchase of stock _________ the earnings per share and _________ the market price of stock.
(a) increases; increases
(b) decreases; decreases
(c) increases; decreases
(d) decreases; increases
Answer: A
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Repurchases

49. Stock repurchasesmay be made for all of the following reasons EXCEPT
(a) to enhance shareholder value by reducing the number of shares outstanding and thereby raising earnings per share.
(b) to help discourage an unfriendly takeover by reducing the number of publicly traded shares.
(c) to make shares available for stock option plans.
(d) to make shares available for stock dividends.Answer: D
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Repurchases
50. When purchasing outstanding shares of common stock a firm can utilize all of the following methods EXCEPT
(a) purchase on the open market at market prices.
(b) with a tender offer at varying prices.
(c) with a tender offer at a specified price.
(d) by purchasing a large block on anegotiated basis.
Answer: B
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Repurchases

51. The purpose of a stock split is to
(a) issue additional shares.
(b) increase the dividend.
(c) reduce the price of stock.
(d) reduce trading activity.
Answer: C
Level of Difficulty: 3
Learning Goal: 6
Topic: Stock Splits

52. The net effect ofa stock repurchase is
(a) similar to the payment of a stock dividend.
(b) similar to a cash dividend.
(c) similar to a stock split.
(d) similar to a reverse stock split.
Answer: B
Level of Difficulty: 4
Learning Goal: 6
Topic: Stock Repurchases

53. Enhancement of shareholder value through stock repurchase is achieved by
(a) reducing the number of...