Steve owns 3,000 shares of NOP, Inc. stock, which he purchased six years ago at a price of $22 a share

If you ignore taxes and costs, a stock repurchase will: I. reduce the total assets of a firm. II. decrease the earnings per share. III. reduce the PE ratio more so than an equivalent stock dividend. IV. reduce the total equity of a firm.    A.  I and III only B.  I and IV only C.  II and IV only D.  I, III, and IV only E.  II, III, and IV only Refer to section 17.6

38.

Steve owns 3,000 shares of NOP, Inc. stock, which he purchased six years ago at a price of $22 a share. Today, these shares are selling for $68 each. Assume the current tax laws are such that Steve is subject to a tax rate of 25 percent on both his dividend income and his capital gains. From Steve's point of view, a stock repurchase today: (Ignore costs)    A.  is equivalent to a cash dividend in all respects. B.  is more desirable than a cash dividend in respect to taxes. C.  will result in the same tax liability as an equivalent cash dividend. D.  is more highly taxed than a cash dividend. E.  is totally unacceptable to him. Refer to section 17.7

39.

Which one of the following statements correctly applies to U.S. industrial firms based on the period of 1984-2004?    A.  Earnings growth rates tend to lag dividend growth rates. B.  Dividends tend to fluctuate significantly from quarter to quarter. C.  The percentage of these firms paying dividends in 2004 was higher than in 1984. D.  The total amount of dividends paid by these firms was greater in 2004 than in 1984. E.  Non-dividend paying firms in 1984 were more apt to commence paying regular dividends than to implement a stock repurchase program. Refer to section 17.7

40.

Which one of the following statements appears to be supported by the current dividend policies of U.S. industrial firms?    A.  Firms tend to increase the dividend amount per share, even when it's unclear if the increase can be maintained. B.  Investors no longer react to changes, either up or down, in dividends. C.  Newer, high-growth firms tend to pay larger dividends than mature firms. D.  Dividends are still viewed by shareholders as a signal of a firm's future outlook. E.  Managers are no longer hesitant to lower dividend payments. Refer to section 17.7

41.

Which one of the following statements is correct?    A.  Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need. B.  Share repurchases tend to increase agency costs. C.  Maintaining a steady dividend is a key goal of most dividend-paying firms. D.  Tax rates are the key factor in determining a firm's dividend policy. E.  Stock prices tend to ignore expected changes in dividend payments. Refer to section 17.7