Exam 8: Common Stock: Characteristics, Valuation, and Issuance

If Crafty Creatures Cage Maker stock sells for $18 per share and the firm nets $12 per share, the difference is called the ____.

Which of the following is NOT an advantage of common stock financing?

Moonshine Company, a producer of fine liqueurs, has earnings and common stock dividends have been growing at an annual rate of 4 percent over the past several years. The firm currently (t = 0) pays an annual dividend of $4.00. Assuming that Moonshine's common stock dividends continue growing at the past rate for the foreseeable future, determine the value of the company's common stock to an investor who requires a 13 percent rate of return on these securities.

In the constant growth dividend valuation model, it is assumed that the ____.

If Night Owl Lamps pays an annual dividend of $1.54, has a PE of 13, and its last closing price was 40, then its dividend yield must be _____.

If the common stock of Comdisco pays an annual dividend of $0.28, has a PE ratio of 11, and closed at 25, what are the current earnings per share?

Over the past 10 years the dividends of Allegro have grown from $0.45 to $1.82 per share. Determine the value of Allegro's common stock to an investor who requires a 20% rate of return, assuming that dividends continue growing at the same rate as they grew over the past 10 years.

A firm may sell its common stock directly to its existing stockholders through a _____.