On 28 February 2020, Xavier Ltd Declared and Distributed an 8

question 33

Multiple Choice

On 28 February 2020, Xavier Ltd declared and distributed an 8% share dividend (bonus issue) . At that date the entity's total share capital was $180 000, fully paid to $1. What is the effect of this dividend on Xavier Ltd's total shareholders' equity?

• A) No effect.
• B) Decrease of $14 400.
• C) Increase of $14 400.
• D) It depends on the current market value of the shares.

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Definitions:

Jensen Portfolio

A portfolio evaluated using Jensen's Alpha, which measures the excess return of the portfolio over the predicted return by the CAPM model for its level of risk.

Treynor Measures

Financial metrics used to assess the returns earned on a portfolio in excess of that which could have been earned on a risk-free investment, per each unit of market risk.

Sharpe Measure

A ratio developed by William F. Sharpe to measure risk-adjusted performance of an investment, calculating how much excess return you are receiving for the extra volatility that you endure for holding a riskier asset.

Dollar Weighted

A method of measuring investment returns which accounts for the size and timing of cash flows into and out of the portfolio.