As of December 31, 2005, Two Otherwise Identical Companies in the Same

question 73

Multiple Choice

As of December 31, 2005, two otherwise identical companies in the same industry, East Company and West Company, have dividend payouts of 20% and 40%, respectively. Looking forward one year, which outcomes are least likely?

I. East Company requires debt financing.
II. West Company increases its dividend payout.
III. West Company's share price is twice that of East Company.
IV. East Company repurchases outstanding shares.

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Definitions:

Red Tide

A population bloom of dinoflagellates that causes coastal waters to turn red. Releases a toxin that can lead to paralytic shellfish poisoning.

Dinoflagellates

A group of protists characterized by their two beating flagella, some of which are photosynthetic, while others can cause red tides.

Euglenoids

A diverse group of unicellular flagellate protists, often found in fresh water, and characterized by the presence of a pellicle, chloroplasts for photosynthesis, and a unique method of motility.

DNA Evidence

Genetic material used in courts or investigations to prove the presence or absence of an individual at a crime scene, or to establish paternity or other relationships.