Compare and contrast the three coremeans of adding shareholder wealth;Cash Dividends, Stock Dividends andStock Splits, and Stock Repurchases.Include the various advantages anddisadvantages of each one.

Comparison and Contrast of Cash Dividends, Stock Dividends and Stock Splits, and Stock Repurchases…

Answered: Compare and contrast the three core…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 3QE

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When all or a portion of shareholders’ capital investments are returned to them, this is called a Select one: a. return dividend. b. liquidating dividend. c. stock dividend. d. investment dividend.
A dividend which is a return to stockholders of a portion of their original investments is a CHoices; property dividend. liquidating dividend. participating dividend. liability dividend.
The distribution of a dividend that represents a partial return of the original investment made by the shareholders is known as a. participating dividend. b. liquidating dividend. c. property dividend.
Define each of the following terms:a. Optimal distribution policyb. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theoryc. Signaling hypothesis; clientele effectd. Residual distribution model; extra dividende. Declaration date; holder-of-record date; ex-dividend date; payment datef. Dividend reinvestment plan (DRIP)g. Stock split; stock dividend; stock repurchase
Define each of the following terms: a. Optimal distribution policy b. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theory c. Signaling hypothesis; clientele effect d. Residual distribution model; extra dividend e. Declaration date; holder-of-record date; ex-dividend date; payment date f. Dividend reinvestment plan (DRIP) g. Stock split; stock dividend; stock repurchase
What do the three theories indicate regardingthe actions management should take withrespect to dividend payouts?
Dividends representing a return of invested capital is known as a. stock dividendb. scrip dividendc. property dividendd. liquidating dividend
The three factors that determine the value of future dividends are...? size, timing, and risk. type, size, and cost. size, risk, and return. timing, risk, and location.
All of the following distributions to stockholders are considered asset or capital distributions, except Cash dividends Property dividends Liquidating dividends Stock splits
Stockholders' equity consists of which of the following? Multiple Choice Paid-in (or contributed) capital and retained earnings. Retained earnings and cash. Long-term assets. Paid-in (or contributed) capital and par value. Premiums and discounts. k
Which of the following affects the total Shareholders’ Equity? a. Declaration of a scrip dividend b. Declaration of share split c. Appropriation of retained earnings d. Retirement of treasury shares
The return on equity is calculated using which of the following formulas? Multiple Choice Net income Stockholders' equity Net income - Average stockholders' equity Net income ÷ Common Stock Net income ÷ Retained earnings

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Compare and contrast the three core means of adding shareholder wealth; Cash Dividends, Stock Dividends and Stock Splits, and Stock Repurchases. Include the various advantages and disadvantages of each one.