Question 1

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Accepted Answer

A) National 
B) Capital 
C) Regional 
D) Global Select 
E) Global 
A) National 
B) Capital 
C) Regional 
D) Global Select 
E) Global

Question 2

Flash Freeze Frozen Foods is expected to pay annual dividends of $1.34 and $ 1.45 at the end of the next two years, respectively.After that, the company expects to pay a constant dividend of $1.50 a share.What is the value of this stock at a required return of 15.1 percent?

Accepted Answer

A) $7.77 
B) $10.25 
C) $9.76 
D) $12.78 
E) $9.93 
A) $7.77 
B) $10.25 
C) $9.76 
D) $12.78 
E) $9.93

Question 3

Graphic Designs has 68,000 shares of cumulative preferred stock outstanding.Preferred shareholders are supposed to be paid $1.60 per quarter per share in dividends.However, the firm has encountered financial problems and has not paid any dividends for the past three quarters.How much will the firm have to pay per share of preferred next quarter if the firm also wishes to pay a common stock dividend?

Accepted Answer

A) $3.20 
B) $4.80 
C) $6.40 
D) $7.50 
E) $1.60 
A) $3.20 
B) $4.80 
C) $6.40 
D) $7.50 
E) $1.60

Question 4

A DMM is a(n):

Accepted Answer

A) employee who executes orders to buy and sell for clients of his or her brokerage firm. 
B) individual who trades on the floor of an exchange for his or her personal account. 
C) NYSE member who functions as a dealer for a limited number of securities. 
D) broker who buys and sells securities from a market maker. 
E) trader who deals only with primary offerings. 
A) employee who executes orders to buy and sell for clients of his or her brokerage firm. 
B) individual who trades on the floor of an exchange for his or her personal account. 
C) NYSE member who functions as a dealer for a limited number of securities. 
D) broker who buys and sells securities from a market maker. 
E) trader who deals only with primary offerings.

Question 5

A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:

Accepted Answer

A) supplemental liquidity provider (SLP). 
B) designated market maker (DMM). 
C) runner. 
D) Floor broker. 
E) market maker. 
A) supplemental liquidity provider (SLP). 
B) designated market maker (DMM). 
C) runner. 
D) Floor broker. 
E) market maker.

Question 6

Juniper Trees has earnings per share of $1.38, all of which is added to retained earnings.What is the value of a share of its stock if the PE ratio is 9.8 and market-to-book ratio is 2.5?

Accepted Answer

A) $13.52 
B) $13.67 
C) $15.30 
D) $33.80 
E) $34.18 
A) $13.52 
B) $13.67 
C) $15.30 
D) $33.80 
E) $34.18

Question 7

When valuing a stock using the constant-growth model, D1 represents the:

Accepted Answer

A) expected difference in the stock price over the next year. 
B) expected stock price in one year. 
C) last annual dividend paid. 
D) the next expected annual dividend. 
E) discount rate. 
A) expected difference in the stock price over the next year. 
B) expected stock price in one year. 
C) last annual dividend paid. 
D) the next expected annual dividend. 
E) discount rate.

Question 8

KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

Accepted Answer

A) $4.49 
B) $3.57 
C) $5.30 
D) $4.15 
E) $4.36 
A) $4.49 
B) $3.57 
C) $5.30 
D) $4.15 
E) $4.36

Question 9

A preferred stock sells for $54.20 a share and has a market return of 9.68 percent.What is the dividend amount?

Accepted Answer

A) $5.09 
B) $5.14 
C) $4.75 
D) $5.42 
E) $5.25 
A) $5.09 
B) $5.14 
C) $4.75 
D) $5.42 
E) $5.25

Question 10

Last year, when the stock of Alpha Minerals was selling for $49.50 a share, the dividend yield was 3.4 percent.Today, the stock is selling for $41 a share.What is the total return on this stock if the company maintains a constant dividend growth rate of 2.2 percent?

Accepted Answer

A) 6.13 percent 
B) 6.58 percent 
C) 6.40 percent 
D) 6.47 percent 
E) 6.38 percent 
A) 6.13 percent 
B) 6.58 percent 
C) 6.40 percent 
D) 6.47 percent 
E) 6.38 percent

Question 11

A broker is an agent who:

Accepted Answer

A) trades on the floor of an exchange for himself or herself. 
B) buys and sells from inventory. 
C) offers new securities for sale to dealers only. 
D) is ready to buy or sell at any time. 
E) brings buyers and sellers together. 
A) trades on the floor of an exchange for himself or herself. 
B) buys and sells from inventory. 
C) offers new securities for sale to dealers only. 
D) is ready to buy or sell at any time. 
E) brings buyers and sellers together.

Question 12

Software Sales Supply is expected to pay its first annual dividend of $.1.10 per share in Year 3.Starting in Year 6, the company plans to increase the dividend by 3.2 percent per year.What is the value of this stock today, Year 0, at a required return of 13.1 percent?

Accepted Answer

A) $8.22 
B) $11.31 
C) $11.49 
D) $10.35 
E) $12.66 
A) $8.22 
B) $11.31 
C) $11.49 
D) $10.35 
E) $12.66

Question 13

For the past six years, the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.Currently, the stock is priced at $43.40 a share and has a required return of 11.65 percent.What is the dividend yield?

Accepted Answer

A) 3.20 percent 
B) 2.75 percent 
C) 3.69 percent 
D) 4.28 percent 
E) 3.44 percent 
A) 3.20 percent 
B) 2.75 percent 
C) 3.69 percent 
D) 4.28 percent 
E) 3.44 percent

Question 14

The Chip Dip Co.has 685,500 shares of stock outstanding, grants one vote per share, and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are five open seats?

Accepted Answer

A) 335,167 shares 
B) 345,134 shares 
C) 345,876 shares 
D) 342,751 shares 
E) 337,134 shares 
A) 335,167 shares 
B) 345,134 shares 
C) 345,876 shares 
D) 342,751 shares 
E) 337,134 shares

Question 15

River City Recycling just paid its annual dividend of $1.15 per share.The required return is 12.3 percent and the dividend growth rate is 0.75 percent.What is the expected value of this stock five years from now?

Accepted Answer

A) $10.16 
B) $10.41 
C) $12.03 
D) $8.42 
E) $9.75 
A) $10.16 
B) $10.41 
C) $12.03 
D) $8.42 
E) $9.75

Question 16

Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent.What is the amount of the last dividend this company paid?

Accepted Answer

A) $1.05 
B) $1.55 
C) $1.60 
D) $1.15 
E) $1.30 
A) $1.05 
B) $1.55 
C) $1.60 
D) $1.15 
E) $1.30

Question 17

River Rock, Inc., just paid an annual dividend of $2.80.The company has increased its dividend by 2.5 percent a year for the past 10 years and expects to continue doing so.What will a share of this stock be worth 6 years from now if the required return is 16 percent?

Accepted Answer

A) $23.60 
B) $24.65 
C) $25.08 
D) $25.50 
E) $26.90 
A) $23.60 
B) $24.65 
C) $25.08 
D) $25.50 
E) $26.90

Question 18

Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?

Accepted Answer

A) NASDAQ Capital Market 
B) Over-the-Counter Bulletin Board 
C) Pink sheets 
D) NASDAQ Global Market 
E) NYSE 
A) NASDAQ Capital Market 
B) Over-the-Counter Bulletin Board 
C) Pink sheets 
D) NASDAQ Global Market 
E) NYSE

Question 19

The common stock of Big Marvin Treats has a total return of 10.25 percent, a stock price of $28.75, and recently paid an annual dividend of $1.65.What is the capital gains rate if the company maintains a constant dividend?

Accepted Answer

A) 7.54 percent 
B) 15.76 percent 
C) 10.37 percent 
D) 4.51 percent 
E) 3.79 percent 
A) 7.54 percent 
B) 15.76 percent 
C) 10.37 percent 
D) 4.51 percent 
E) 3.79 percent

Question 20

Which one of the following must equal zero if a firm pays a constant annual dividend?

Accepted Answer

A) Dividend yield 
B) Capital gains yield 
C) Total return 
D) Par value per share 
E) Book value per share 
A) Dividend yield 
B) Capital gains yield 
C) Total return 
D) Par value per share 
E) Book value per share

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Flash Freeze Frozen Foods is expected to pay annual dividends of $1.34 and $ 1.45 at the end of the next two years, respectively.After that, the company expects to pay a constant dividend of $1.50 a share.What is the value of this stock at a required return of 15.1 percent?

A DMM is a(n):

A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:

Juniper Trees has earnings per share of $1.38, all of which is added to retained earnings.What is the value of a share of its stock if the PE ratio is 9.8 and market-to-book ratio is 2.5?

When valuing a stock using the constant-growth model, D₁represents the:

KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

A preferred stock sells for $54.20 a share and has a market return of 9.68 percent.What is the dividend amount?

Last year, when the stock of Alpha Minerals was selling for $49.50 a share, the dividend yield was 3.4 percent.Today, the stock is selling for $41 a share.What is the total return on this stock if the company maintains a constant dividend growth rate of 2.2 percent?

A broker is an agent who:

Software Sales Supply is expected to pay its first annual dividend of $.1.10 per share in Year 3.Starting in Year 6, the company plans to increase the dividend by 3.2 percent per year.What is the value of this stock today, Year 0, at a required return of 13.1 percent?

For the past six years, the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.Currently, the stock is priced at $43.40 a share and has a required return of 11.65 percent.What is the dividend yield?

The Chip Dip Co.has 685,500 shares of stock outstanding, grants one vote per share, and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are five open seats?

River City Recycling just paid its annual dividend of $1.15 per share.The required return is 12.3 percent and the dividend growth rate is 0.75 percent.What is the expected value of this stock five years from now?

Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent.What is the amount of the last dividend this company paid?

River Rock, Inc., just paid an annual dividend of $2.80.The company has increased its dividend by 2.5 percent a year for the past 10 years and expects to continue doing so.What will a share of this stock be worth 6 years from now if the required return is 16 percent?

Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?

The common stock of Big Marvin Treats has a total return of 10.25 percent, a stock price of $28.75, and recently paid an annual dividend of $1.65.What is the capital gains rate if the company maintains a constant dividend?

Which one of the following must equal zero if a firm pays a constant annual dividend?

Introduction to Financial Management

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

Exam 7: Equity Markets and Stock Valuation

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Flash Freeze Frozen Foods is expected to pay annual dividends of $1.34 and $ 1.45 at the end of the next two years, respectively.After that, the company expects to pay a constant dividend of $1.50 a share.What is the value of this stock at a required return of 15.1 percent?

A DMM is a(n):

A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:

Juniper Trees has earnings per share of $1.38, all of which is added to retained earnings.What is the value of a share of its stock if the PE ratio is 9.8 and market-to-book ratio is 2.5?

When valuing a stock using the constant-growth model, D1 represents the:

KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

A preferred stock sells for $54.20 a share and has a market return of 9.68 percent.What is the dividend amount?

Last year, when the stock of Alpha Minerals was selling for $49.50 a share, the dividend yield was 3.4 percent.Today, the stock is selling for $41 a share.What is the total return on this stock if the company maintains a constant dividend growth rate of 2.2 percent?

A broker is an agent who:

Software Sales Supply is expected to pay its first annual dividend of $.1.10 per share in Year 3.Starting in Year 6, the company plans to increase the dividend by 3.2 percent per year.What is the value of this stock today, Year 0, at a required return of 13.1 percent?

For the past six years, the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.Currently, the stock is priced at $43.40 a share and has a required return of 11.65 percent.What is the dividend yield?

The Chip Dip Co.has 685,500 shares of stock outstanding, grants one vote per share, and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are five open seats?

River City Recycling just paid its annual dividend of $1.15 per share.The required return is 12.3 percent and the dividend growth rate is 0.75 percent.What is the expected value of this stock five years from now?

Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent.What is the amount of the last dividend this company paid?

River Rock, Inc., just paid an annual dividend of $2.80.The company has increased its dividend by 2.5 percent a year for the past 10 years and expects to continue doing so.What will a share of this stock be worth 6 years from now if the required return is 16 percent?

Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?

The common stock of Big Marvin Treats has a total return of 10.25 percent, a stock price of $28.75, and recently paid an annual dividend of $1.65.What is the capital gains rate if the company maintains a constant dividend?

Which one of the following must equal zero if a firm pays a constant annual dividend?

Introduction to Financial Management

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

When valuing a stock using the constant-growth model, D₁represents the: