Multiple Choice Answers

Which of the following statements is (are) true regarding the signaling view (aka informational content) of dividend policy?
a. Stock market (prices) generally react positively to dividend increases (above expected)
b. Stock market (prices) generally react positively to dividend decreases (cuts)
c. Stock market (prices) generally react negatively to dividend increases (above expected)
d. Stock market (prices) generally react negatively to dividend decreases (cuts)
e. Both a & d
f. Both b & c
g. None of the above

Buying a put option would protect you from
a. the price of the underlying asset rising
b. the price of the underlying asset falling
c. having to buy the underlying asset at a higher price in the future.
d. none of the above.

Which of the following leases is (are) non-cancelable?
A. operating leases
b. financial (a.k.a. capital) leases
c. both are non-cancelable

The price at which the holder of a call option may buy the underlying asset is know as the
a. option price
b. exercise price
c. market price
d. common price

Limited liability makes the payoff (at liquidation of the firm) of a common stock look like the payoff of a
a. put option
b. forward contract
c. futures contract
d. call option
e. none of the above

If a firm executed a 3-for-1 stock split, you would expect that the value of
a. an investment in the firm should increase because having 3 stocks is clearly better than 1.
b. each new stock should be approximately 3 times the value of the original stock
c. each new stock should be approximately equal to the value of the original stock
d. each new stock should be approximately one-third of the value of the original stock
e. all of the above would be essentially equally probable outcomes