Flashcards
Chapter 18 Cue Cards
Cards in this deck (8)
- 1Difference between declaration date and ex declaration dateEx determines whether a stockholder is entitled to a dividend payment (anyone holding before date is entitled)
Declaration date is when dividend for next quarter is declared - 2What is a reverse splitIssue of new shares in exchange for old shares which results in reduction of outstanding shares
- 3Define: Dividend Reinvestment Plan (DRIP)Enables shareholder to reinvest dividends into new shares
- 4What is a stock repurchaseWhen firm buys back stock from its shareholders
- 5What is the irrelevancy of Dividend PolicySince investors do not need dividends to convert shares to cash, they will not pay higher prices for firms with higher dividend payouts. (therefore no impact)
- 6What is the clientele effect?Natural clients for high payout stocks.
These clients increase price of stock through demand for dividend paying stock
Dividend increases signal a company good fortune. - 7If dividends are taxed heavier than capital gains, policy of high paying dividends helps the firm T/FFalse,
Hurts the firm - 8In Canada, both capital gains and dividends are taxed at lower rate than interest and other types of incomes T/FTrue