Chapter 18 Cue Cards

Flashcards by dylan_earl, updated more than 1 year ago
Created by dylan_earl over 5 years ago



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Question Answer
Difference between declaration date and ex declaration date Ex 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
What is a reverse split Issue of new shares in exchange for old shares which results in reduction of outstanding shares
Define: Dividend Reinvestment Plan (DRIP) Enables shareholder to reinvest dividends into new shares
What is a stock repurchase When firm buys back stock from its shareholders
What is the irrelevancy of Dividend Policy Since 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)
What 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.
If dividends are taxed heavier than capital gains, policy of high paying dividends helps the firm T/F False, Hurts the firm
In Canada, both capital gains and dividends are taxed at lower rate than interest and other types of incomes T/F True
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