Question Tag: Dividends

Search 500 + past questions and counting.

FM – May 2016 – L3 – Q6b – Investment Appraisal Techniques

Calculating the betas, required rates of return, and stock prices for three securities based on market data and forecasts.

Question

The expected return on the market portfolio (estimated from past data) is 12% p.a. with a standard deviation of 15% and the risk-free rate of 4% p.a. The actual prices, last year dividends, and the covariances from three securities (A, B, C) with the market are given in the table below:

Security	Actual Price (N)	Last Year Dividend (N)	Covariance with Market
A	107	1.30	0.025650
B	618	18.00	0.018675
C	1,350	22.00	0.029025

You are required to:

i.

Calculate the betas and the required rates of return of securities A, B, and C. (3 Marks)

ii.

In the table below, you have the market consensus forecast of 12-month price targets, ex-dividends, and the expected dividend growth rate of the securities.

Security	12-month price target (N)	Dividend growth rate (%)
A	122.50	12
B	740.00	10
C	1,500.00	11

Assuming the dividends are paid in 12 months exactly, compute the required stock price for the 3 stocks and state your conclusion. (4 Marks)

iii.

Considering the results in (ii) above, explain briefly what will be your strategy? (1 Mark)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beta, CAPM, Dividends, Market Portfolio, Required Return, Stock valuation
Level: Level 3

Topic: Investment Appraisal Techniques

FM – May 2022 – L3 – Q7 – Dividend Policy

Brief on various dividend concepts, including residual theory, clientele effect, and signaling.

Question

You are required to provide a briefing on the following dividend concepts:
a. Residual theory of dividends (3 Marks)
b. Clientele effect (3 Marks)
c. Asymmetric information (2 Marks)
d. Signaling properties of dividends (3 Marks)
e. The ‘bird-in-the-hand’ argument (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bird-in-the-Hand, Clientele Effect, Dividends, Residual Theory, Signaling
Level: Level 3

Topic: Dividend Policy

ATAX – Nov 2016 – L3 – Q5b – Tax Incentives and Reliefs

Calculates tax liabilities for a pioneer company and withholding tax on dividends during the pioneer period.

Question

Ajanaku Nigeria Limited was incorporated as a pioneer company on March 15, 2011, focusing on aluminum roofing sheets. It received a Pioneer Certificate with Production Day as July 1, 2011. Extracts from its Audited Financial Statements are as follows:

Gross dividends declared:

2013: N600,000
2014: N1,500,000

Withholding tax rate on dividends for these years is 10%. Ignore Minimum Tax provisions. The initial tax relief period was not extended.

You are required to:

Compute the tax liabilities for the relevant years of assessment relating to Pioneer Status only.
State the amount of Withholding Tax due from the shareholders. (11 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Profit, Dividends, Pioneer Status, Tax exemption, Withholding Tax
Level: Level 3

Topic: Tax Incentives and Reliefs

FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)

Identify and explain events after the reporting period, discuss treatment of liquidation and dividends under IAS 10.

Question

(a) There is usually a lead time between the end of an entity’s accounting year and when the financial statements are approved and signed off by the directors. In between this period, there are two types of events according to IAS 10-Events After The Reporting Period, which may require consideration when preparing financial statements.

Required:
Identify and explain these events and state how they are treated in the financial statements. (4 Marks)

(b) Company A is indebted to company B to the tune of N50,000,000. The financial year-end of company B is 30 June 2014. On 30 July 2014, company B received a letter from a liquidator advising it that company A has gone into insolvency. The letter revealed that company A ceased operations a month ago and that company B is only likely to receive a liquidation dividend of 20k for every naira owed by company A. It is the normal practice of company B’s board to approve the audited financial statements three months after the financial year end.

Required:

Explain how the above transactions should be treated in the financial statements of company B in accordance with IAS 10-Events After The Reporting Period. (2 Marks)
Prepare journal entries that are required to adjust company B’s financial statements to account for the above event. (2 Marks)
State what would have been the treatment in the financial statements assuming it was fire that destroyed company B’s factory building on 30 July 2014. (3 Marks)

(c) The directors of XYZ Plc declared that a dividend of N1 per ordinary share be paid to shareholders on the company’s register as at 15 April 2014. The financial statements were approved by the company’s board on 30 May 2014. The shareholders, at the company’s annual general meeting held on 15 June 2014, approved the payment of the dividend to eligible shareholders on 1 July 2014.

Required:
Explain how the dividend proposed by the Directors should be treated in the financial statements of XYZ Plc in accordance with IAS 10. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusting Events, Contingent Liabilities, Dividends, Events After Reporting Period, Liquidation
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAY 2015

BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives

Identify the item that is NOT of interest to shareholders in an organisation.

Question

Shareholders in large companies are usually investors seeking to earn a return on their investment in the form of dividends and a higher share price. Which of the following is NOT a matter that would be of interest to shareholders in an organisation?
A. A proposal to invest in a major project where the return is high
B. A proposed takeover bid for another company that offers better returns
C. Bonuses and shares
D. High dividend payments
E. Increasing profits and share price

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Actions, Dividends, Investments, Shareholders
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements

Calculate the dividend payable to ordinary shareholders.

Question

If a 10% dividend is approved, what is the dividend payable to ordinary shareholders?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividends, Equity, Shareholders
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

Question

Which of these is NOT a characteristic of bonus issue?

A. Increasing capital without diluting current shareholdings
B. Capitalising reserves, so that they cannot be paid as dividends
C. Not raising cash
D. Generating new shares
E. Could jeopardise payment of future dividend if profit declines

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bonus issue, Capital, Dividends, Shareholders
Level: Level 1

TAX – May 2018 – L2 – Q6a – Tax Administration and Enforcement

Explain dividends exempted from Withholding Tax.

Question

Briefly explain THREE dividends exempted from Withholding Tax.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividends, Tax Exemptions, Withholding Tax
Level: Level 2

Topic: Tax Administration and Enforcement, The Nigerian Tax System
Series: MAY 2018

FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements

Determining the dividend payable to a shareholder.

Question

A dividend of 10% on the nominal value of a company with 100,000 ordinary shares of 50k nominal value has been declared. How much will a shareholder receive as dividend if he has 10,000 shares?

A. N200
B. N400
C. N500
D. N1,000
E. N5,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Calculations, Dividends, Shareholder Payments
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

BL – May 2022 – L1 – SA – Q13 – Law Relating to Banking

Identify the operational expense that a bank does not need to write off before paying dividends.

Question

The operational expenses that a bank must write off before paying dividends include the following, EXCEPT
A. Preliminary expenses
B. Set off
C. Organisational expenses
D. Share selling commission
E. Brokerage

Answer

Find Related Questions by Tags, levels, etc.

Tags: Banking, Dividends, Operational Expenses
Level: Level 1

Topic: Law Relating to Banking
Series: MAY 2022

FM – May 2016 – L3 – Q6b – Investment Appraisal Techniques

Calculating the betas, required rates of return, and stock prices for three securities based on market data and forecasts.

Question

Security	Actual Price (N)	Last Year Dividend (N)	Covariance with Market
A	107	1.30	0.025650
B	618	18.00	0.018675
C	1,350	22.00	0.029025

You are required to:

i.

Calculate the betas and the required rates of return of securities A, B, and C. (3 Marks)

ii.

In the table below, you have the market consensus forecast of 12-month price targets, ex-dividends, and the expected dividend growth rate of the securities.

Security	12-month price target (N)	Dividend growth rate (%)
A	122.50	12
B	740.00	10
C	1,500.00	11

Assuming the dividends are paid in 12 months exactly, compute the required stock price for the 3 stocks and state your conclusion. (4 Marks)

iii.

Considering the results in (ii) above, explain briefly what will be your strategy? (1 Mark)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beta, CAPM, Dividends, Market Portfolio, Required Return, Stock valuation
Level: Level 3

Topic: Investment Appraisal Techniques

FM – May 2022 – L3 – Q7 – Dividend Policy

Brief on various dividend concepts, including residual theory, clientele effect, and signaling.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bird-in-the-Hand, Clientele Effect, Dividends, Residual Theory, Signaling
Level: Level 3

Topic: Dividend Policy

ATAX – Nov 2016 – L3 – Q5b – Tax Incentives and Reliefs

Calculates tax liabilities for a pioneer company and withholding tax on dividends during the pioneer period.

Question

Gross dividends declared:

2013: N600,000
2014: N1,500,000

Withholding tax rate on dividends for these years is 10%. Ignore Minimum Tax provisions. The initial tax relief period was not extended.

You are required to:

Compute the tax liabilities for the relevant years of assessment relating to Pioneer Status only.
State the amount of Withholding Tax due from the shareholders. (11 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Profit, Dividends, Pioneer Status, Tax exemption, Withholding Tax
Level: Level 3

Topic: Tax Incentives and Reliefs

FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)

Identify and explain events after the reporting period, discuss treatment of liquidation and dividends under IAS 10.

Question

Required:
Identify and explain these events and state how they are treated in the financial statements. (4 Marks)

Required:

Explain how the above transactions should be treated in the financial statements of company B in accordance with IAS 10-Events After The Reporting Period. (2 Marks)
Prepare journal entries that are required to adjust company B’s financial statements to account for the above event. (2 Marks)
State what would have been the treatment in the financial statements assuming it was fire that destroyed company B’s factory building on 30 July 2014. (3 Marks)

Required:
Explain how the dividend proposed by the Directors should be treated in the financial statements of XYZ Plc in accordance with IAS 10. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusting Events, Contingent Liabilities, Dividends, Events After Reporting Period, Liquidation
Level: Level 2

Topic: Consolidated Financial Statements (IFRS 10)
Series: MAY 2015

BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives

Identify the item that is NOT of interest to shareholders in an organisation.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Actions, Dividends, Investments, Shareholders
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements

Calculate the dividend payable to ordinary shareholders.

Question

If a 10% dividend is approved, what is the dividend payable to ordinary shareholders?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividends, Equity, Shareholders
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

Question

Which of these is NOT a characteristic of bonus issue?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bonus issue, Capital, Dividends, Shareholders
Level: Level 1

TAX – May 2018 – L2 – Q6a – Tax Administration and Enforcement

Explain dividends exempted from Withholding Tax.

Question

Briefly explain THREE dividends exempted from Withholding Tax.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividends, Tax Exemptions, Withholding Tax
Level: Level 2

Topic: Tax Administration and Enforcement, The Nigerian Tax System
Series: MAY 2018

FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements

Determining the dividend payable to a shareholder.

Question

A dividend of 10% on the nominal value of a company with 100,000 ordinary shares of 50k nominal value has been declared. How much will a shareholder receive as dividend if he has 10,000 shares?

A. N200
B. N400
C. N500
D. N1,000
E. N5,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Calculations, Dividends, Shareholder Payments
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

BL – May 2022 – L1 – SA – Q13 – Law Relating to Banking

Identify the operational expense that a bank does not need to write off before paying dividends.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Banking, Dividends, Operational Expenses
Level: Level 1

Topic: Law Relating to Banking
Series: MAY 2022

Question Tag: Dividends

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

FM – May 2016 – L3 – Q6b – Investment Appraisal Techniques

Calculating the betas, required rates of return, and stock prices for three securities based on market data and forecasts.

i.

ii.

iii.

You're reporting an error for "FM – May 2016 – L3 – Q6b – Investment Appraisal Techniques"

FM – May 2022 – L3 – Q7 – Dividend Policy

Brief on various dividend concepts, including residual theory, clientele effect, and signaling.

You're reporting an error for "FM – May 2022 – L3 – Q7 – Dividend Policy"

ATAX – Nov 2016 – L3 – Q5b – Tax Incentives and Reliefs

Calculates tax liabilities for a pioneer company and withholding tax on dividends during the pioneer period.

You're reporting an error for "ATAX – Nov 2016 – L3 – Q5b – Tax Incentives and Reliefs"

FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)

Identify and explain events after the reporting period, discuss treatment of liquidation and dividends under IAS 10.

You're reporting an error for "FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)"

BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives

Identify the item that is NOT of interest to shareholders in an organisation.

You're reporting an error for "BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives"

FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements

Calculate the dividend payable to ordinary shareholders.

You're reporting an error for "FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements"

FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

You're reporting an error for "FA – Nov 2012 – L1 – SA – Q2 – Financial Statements"

TAX – May 2018 – L2 – Q6a – Tax Administration and Enforcement

Explain dividends exempted from Withholding Tax.

You're reporting an error for "TAX – May 2018 – L2 – Q6a – Tax Administration and Enforcement"

FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements

Determining the dividend payable to a shareholder.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements"

BL – May 2022 – L1 – SA – Q13 – Law Relating to Banking

Identify the operational expense that a bank does not need to write off before paying dividends.

You're reporting an error for "BL – May 2022 – L1 – SA – Q13 – Law Relating to Banking"

FM – May 2016 – L3 – Q6b – Investment Appraisal Techniques

Calculating the betas, required rates of return, and stock prices for three securities based on market data and forecasts.

i.

ii.

iii.

You're reporting an error for "FM – May 2016 – L3 – Q6b – Investment Appraisal Techniques"

FM – May 2022 – L3 – Q7 – Dividend Policy

Brief on various dividend concepts, including residual theory, clientele effect, and signaling.

You're reporting an error for "FM – May 2022 – L3 – Q7 – Dividend Policy"

ATAX – Nov 2016 – L3 – Q5b – Tax Incentives and Reliefs

Calculates tax liabilities for a pioneer company and withholding tax on dividends during the pioneer period.

You're reporting an error for "ATAX – Nov 2016 – L3 – Q5b – Tax Incentives and Reliefs"

FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)

Identify and explain events after the reporting period, discuss treatment of liquidation and dividends under IAS 10.

You're reporting an error for "FR – May 2015 – L2 – SB – Q7 – Consolidated Financial Statements (IFRS 10)"

BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives

Identify the item that is NOT of interest to shareholders in an organisation.

You're reporting an error for "BMF – Nov 2020 – L1 – SA – Q1 – Nature of Business, Types, and Objectives"

FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements

Calculate the dividend payable to ordinary shareholders.

You're reporting an error for "FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements"

FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

You're reporting an error for "FA – Nov 2012 – L1 – SA – Q2 – Financial Statements"

TAX – May 2018 – L2 – Q6a – Tax Administration and Enforcement

Explain dividends exempted from Withholding Tax.

You're reporting an error for "TAX – May 2018 – L2 – Q6a – Tax Administration and Enforcement"

FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements

Determining the dividend payable to a shareholder.

You're reporting an error for "FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements"

BL – May 2022 – L1 – SA – Q13 – Law Relating to Banking

Identify the operational expense that a bank does not need to write off before paying dividends.

You're reporting an error for "BL – May 2022 – L1 – SA – Q13 – Law Relating to Banking"

Our offerings

Contact Info

Customer

Get In Touch

admin