Objective questions based on issue of dividend


Question1: Paying a stock dividend ______ the retained earning account.

[A] Increases

[B] Reorganizes

[C] Decreases

[D] Has no effect on

Question2: The _____ is the rate of return a firm must earn on its investments in projects in order to maintain the market value of its stock.

[A] Internal rate of return

[B] Gross profit margin

[C] Yield to maturity

[D] Cost of capital

Question3: The _______ costs are a function of time, not sales, & typically contractual

[A] variable

[B] Operating

[C] Fixed

[D] Semi-variable

Question4: In order to enhance the wealth of stock holders & to send positive signals to the market, corporations generally raise funds using the following order;

[A] Debt, retain earning, equity

[B] Equity, retain earnings, debt

[C] Retain earnings, equity, debt

[D] Retain earnings, debt, equity

Question5: Dividend policy is a form of

[A] Working capital policy

[B] Dividend reinvestment polity

[C] Capital budgeting policy

[D] Financing policy

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Finance Basics: Objective questions based on issue of dividend
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