1. BUS 401 final exam
1. JBC Corp. declared a dividend of $2 per share, which was an increase of 25% from
the prior year, yet JBC Corp. stock declined by 3% the day of the announcement. RBG
Corp. declared a dividend of $2 per share, which was the same as the prior year, and
its stock increased in value by 2% on the day of the announcement. These events could
be most readily explained by the (Points : 1)
2. A firms optimal capital structure occurs where? (Points : 1)
3. Flotation costs: (Points : 1)
4. Assume that the tax on dividends and the tax on capital gains is the same. All else
equal, what would a prudent investor prefer? (Points : 1)
5. The break-even point is equal to (Points : 1)
6. The payment of dividends may indirectly result in closer monitoring of managements
investment activities, thus increasing shareholder value by (Points : 1)
7. A firm that uses large amounts of debt financing in an industry characterized by a
high degree of business risk would have ______ earnings per share fluctuations
resulting from changes in levels of sales. (Points : 1)
8. A high degree of variability in a firms earnings before interest and taxes refers to
(Points : 1)
9. As production levels increase, (Points : 1)
10. Moline Manufacturing Corporation reported the following items: Sales =
$6,000,000; Variable Costs of Production = $1,500,000; Variable Selling and
Administrative Expenses = $550,000; Fixed Costs = $1,350,000; EBIT = $2,600,000;
and the Marginal Tax Rate =35%. Molines break-even point in sales dollars is (Points :
1)