CFA 2026 Level II Vignettes Corporate Finance Dividend Policy Free Quiz 3

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CFA 2026 Level II Vignettes Corporate Finance Dividend Policy Free Quiz 3

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CFA 2026 Level II Vignettes Corporate Finance Dividend Policy Free Quiz 3

Practice CFA 2026 Level II Vignettes Corporate Finance MCQs from Dividend Policy. Get instant results with Explanation.

General10 MCQs

1. Vignette 5: Dividend Policy - What is the dividend payout ratio?

A. Dividends per share / Book value per shareB. Dividends per share / Price per shareC. Earnings per share / Dividends per shareD. Dividends per share / Earnings per share

2. What is the dividend yield?

A. Annual dividends per share / Current stock priceB. Earnings per share / Stock priceC. Dividends per share / Book value per shareD. Stock price / Dividends per share

3. How are payout ratio and dividend yield related?

A. Payout ratio and dividend yield are unrelatedB. Payout ratio and dividend yield are both influenced by dividend policyC. Dividend yield is always higher than payout ratioD. Payout ratio is always lower than dividend yield

4. What is the relationship between retention rate and payout ratio?

A. Retention rate = 1 + payout ratioB. Retention rate = payout ratio – 1C. Retention rate = 1 – payout ratioD. Retention rate = payout ratio / ROE

5. What is the sustainable growth rate formula?

A. g = ROE × payout ratioB. g = ROE / (1 – payout ratio)C. g = (1 – payout ratio) / ROED. g = ROE × (1 – payout ratio)

General10 MCQs

6. Vignette 6: Dividend Policy - What does empirical evidence say about the effect of dividend policy on firm value?

A. Empirical evidence shows that dividend policy has no effect on stock returnsB. Empirical evidence suggests that dividend changes convey information (signaling) and may affect stock pricesC. Empirical evidence shows that dividends always increase stock pricesD. Empirical evidence shows that dividends always decrease stock prices

7. How do stock prices typically react to dividend increases?

A. Dividend increases always lead to negative stock price reactionsB. Dividend decreases are always positive signalsC. Dividend increases are generally associated with positive stock returns (signaling effect)D. Dividend changes do not affect stock prices

8. What is dividend smoothing and why do companies do it?

A. Companies smooth dividends to avoid signaling uncertaintyB. Companies change dividends frequently based on earningsC. Dividend smoothing is not practicedD. Dividend smoothing only applies to small companies

9. What is a special dividend?

A. Special dividends are the same as regular dividendsB. Special dividends are always followed by dividend cutsC. Special dividends are always smaller than regular dividendsD. Special dividends are one-time payments and may not signal a change in policy

10. What trend has been observed in recent dividend policy?

A. Companies are moving away from buybacks toward dividendsB. Companies are increasingly using share repurchases as a substitute for dividendsC. Dividends and buybacks are equally popularD. Buybacks are only used by small companies

📋 CFA - Test Online Practice Quizzes

CFA

Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 135 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Alternative Investments: 8 MCQs
Corporate Issuers: 7 MCQs
Derivatives: 5 MCQs
Economics: 7 MCQs
Equity Investments: 12 MCQs
Ethics: 16 MCQs
Financial Statement Analysis: 11 MCQs
Fixed Income: 11 MCQs
Portfolio Management: 9 MCQs
Quant Methods: 6 MCQs

Merit Formula: -

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