UNIVERSITY OF a2kGOS \ SCHOOL OF POSTGRADUATE STUDIES i DEPARTMENT OF BINANCE MDE/PGD QUALIFYING £ AMINATION 2014/2015 F CORPORATE FIN a ‘ INSTRUCTION: ATTEMPT ALLO IN: MCQs in the OMR sheet provide y required af you in the OMR shee! OMR sheet must be submitted togeth ; TIME ALLOWED: 40 MINUT: hade with HB pencil th correet d. Eusure that you prdvide all t. Both the question paper and (the end of the cxantination. 1. Bobby Pie. has an issue 11.5% B 2, 000, 001 0 irredeemable preferende share ith a current market value of 8 2,9 75,000. Determine the cost of prdference share. | a 7% b. 7.6% 7.7% 4.725% es nel | = 2. The most prefer forni of dividends payment in Nigeria tock split. B-Stock dividend. —_e, Cash dividend. —_d. Reverse iB split. 3. One of the disadvantages of stable dividend policy is. a. It ensures regularity in the payment of dividend, b. It tends (o reduce the level of uncertainty ¢. It enables company to retain more especially in a boom year, Profit or earnings for internal financing, 4. In case of making loses, the company must pay dividend, 4. Charles Ple, as at 31° December, 2013 is financed by 1,000,000 ordinary shares of 8 1.00 each currently selling at 4 9.68. An ordinary dividend of 70 Kobo is expected to be paid at the end of the current year and the annual rate of growth of dividend has been stagnant at 8%. What is the company’s cost of , equity? a. 172% b.14% ©. 14.2% 4. 15.2% ®, Dividend decision in a corporate firm is based on the... a. Profit maximization b. W minimization ++ objective ealth maximization c. Risk management d. Value 6. Dividend policy is usually decided upona. at thejcompany’s annual general meeting - ». After the company’s annual general meeting ¢- At the company’s extra ordinary mecting, d. Prior to the company’s annual general meeting. 7. Dividend clientele ¢ ct is based on the a variable in determining the company v An active, ssumption that dividend nue, policy is b. Not an active, ¢. Constant. i. passive, 8. Modigliani and Miller hypothesis is b: ased on... a. Imperfeetamarket b, Pr market ¢ Monopoly market d. Oligop “9. Modigliani and Miller believe that the v a. Dividend decision . d. All ofithe above poly market alue of a company is based on b. Financing decision ¢, Investment dee 10. Dividend theory of Modigliani and a. Dividend Relevant Payment d. All of the above Miller is known as b, Dividend Yrrelevanc, ©. Dividend 11. Which of the following is not an assumption of the Modigliani and Mille theory? : ‘ a, No corporate tax b. Capital Market Imperfection e. There is no risk at all d. Perfect market situation 12. The bird.in hand theory of dividend polic a. Gordon b. Waiter y Was first propounded by c. Modigliani d. John Litner 13. In Gardon model, retention ratio is denoted as aeche i b. EPS e. DPS db 14. The dividend annual growth rate is defined as a, Earnings per share X Dividend per share b. Retention ratio X Warnings per share ; - Retention ratio X Internal rate of return Gd. Retained earning 15. The sien relev: ancy theory is not supported by a. Gord ln b. Walter ©. Modig! niand Miller ‘da and b fs ©16, Abu Pl period of S ye asan issue 14% N 1,000 face vaiue bond which has a maturity - Catculate the current market price of the bond, if thre yield to maturity is 12% and interest is paid twice in a year, 4 1,063.60 b. 8 1,073.60 eM LL 60, d. none of the above 17. One of the a ‘sumptions of Walter model is that a. Dividend per share is not constant : ning per share is constant tention ratio is constant d. Growth rate is constant 18. The following are factors affeeting dividend policy except a. Age of the director’sb. Size of the firm. e. Inflation d. Loan agreement . One of the effect of reverse split is that he aumber of outstand split. shares increases proportionately with reverse b. ‘The par value of company share decreases. c. Reverse split serves 1n indication that future dividend thust decrease, «i, Cash position, and liquidity position of a company remained unaffected 20. One of the following is not true about stock split. ‘tock split serves as tax benefit to the existing ordinary shareholders of a firsa. }. Stock split serves as an indication that future earning will decrease. e. Stock split serves as an indication that future dividend will increase. 4. Stock split makes shares of a company more attractive to rational investors, 21, The most preferred fornt of dividend payment in Nigeria is........ 1. Stock split. b. Stock dividend. ce. Cash dividend. d. Reverse split. 22, A bond with 10 years until maturity pays an annual coupon of N90 and will also pay NI, 000 a maturity. What is the price of the bond, if the interest rate 6 9%? aM 1,000 boN 1,100 ©. M1140 d. None of the above One of the following is not a type of dividend policy. : - Stock dividend policy. __b, Residlual dividend policy. c. Stable dividend policy. d. Constant dividend policy.