Old Exam

A part of the registration statement, called the preliminary prospectus, circulates to investors before the stock is offered. This preliminary prospectus is also called a(n):

A.     10-K filing.                                                         B. blue whale.   

C.  IPO filing.                                                            D. red herring.

Which of the following statements is FALSE?                                                                                                

A.     One-year investors, pension funds, and other non-taxed investors have no tax preference for share repurchases over dividends, so they would prefer a payout policy that most closely matches their cash needs.

B.       Long-term investors are more heavily taxed on capital gains, so they would prefer dividend payments to share repurchases.

C.      While many investors have a tax preference for share repurchases rather than dividends, the strength of that preference depends on the difference between the dividend tax rate and the capital gains tax rate that they face.

D.     Tax rates vary by income, by jurisdiction, and by whether the stock is held in a retirement account. Because of these differences, firms may attract different groups of investors depending on their dividend policy.

Which of the following statements is FALSE?                                                                                                

A.     The average size of the stock price reaction increases with the magnitude of the dividend change, and is larger for dividend cuts.

B.       When managers cut the dividend, it may signal that they have given up hope that earnings will rebound in the near term and need to reduce the dividend to save cash.

C.      Firms adjust dividends relatively infrequently, and dividends are much less volatile than earnings. This practice of maintaining relatively constant dividends is called dividend signaling.

D.     When a firm increases its dividend, it sends a positive signal to investors that management expects to be able to afford the higher dividend for the foreseeable future.

4) What kind of corporate debt has a maturity of less than 10 years?                                                                   

A.     Mortgage bonds                                              B. Asset-backed bonds

C.  Notes                                                                    D. Debentures

5) Which of the following statements regarding leases is FALSE?                                                                                                

A)     Leases may allow the lessee to trade in and upgrade the equipment to a newer model at certain points in the lease.

B)      Leases may contain buyout options that allow the lessee to purchase the asset before the end of the lease term.

C)     Leases may include early cancellation options that allow the lessee to end the lease early (perhaps for a fee).

D)     The cost of the lease will depend on the asset's residual value, which is its book value at the end of the lease.

A part of the registration statement, called the preliminary prospectus, circulates to investors before the stock is offered. This preliminary prospectus is also called a(n):                                                               

A.     10-K filing.                                                         B. bluewhale.   

C.  IPO filing.                                                            D. red herring.

What are different ways available to a firm to use for repurchasing shares