Exam 15: Options Markets

Dominion Tool Company is expected to pay a dividend of $2 in the upcoming year.The risk-free rate of return is 4% and the expected return on the market portfolio is 14%.Analysts expect the price of Dominion Tool Company shares to be $22 a year from now.The beta of Dominion Tool Company's stock is 1.25.The market's required rate of return on Dominion's stock is ____.

The stock price index and new orders for durables are

The dividend discount model

High Tech Chip Company paid a dividend last year of $2.50.The expected ROE for next year is 12.5%.An appropriate required return on the stock is 11%.If the firm has a plowback ratio of 60%,the dividend in the coming year should be

GDP refers to __________.

High Tech Chip Company is expected to have EPS in the coming year of $2.50.The expected ROE is 12.5%.An appropriate required return on the stock is 11%.If the firm has a plowback ratio of 70%,the growth rate of dividends should be

Which of the following statements is true?

If a firm has a required rate of return equal to the ROE

________ are analysts who use information concerning current and prospective profitability of a firms to assess the firm's fair market value.

Lifecycle Bicycle Company is expected to pay a dividend in year 1 of $1.20,a dividend in year 2 of $1.50,and a dividend in year 3 of $2.00.After year 3,dividends are expected to grow at the rate of 10% per year.An appropriate required return for the stock is 14%.The stock should be worth _______ today.

Supply-side economists wishing to stimulate the economy are most likely to recommend

Questionable Systematic Risk Company is expected to pay a dividend of $3.50 in the coming year.Dividends are expected to grow at a rate of 10% per year.The risk-free rate of return is 5% and the expected return on the market portfolio is 13%.The stock is trading in the market today at a price of $90.00.What is the approximate beta of Questionable's stock?

Which of the following combinations will produce the highest growth rate? Assume that the firm's projects offer a higher expected return than the market capitalization rate.

________ is equal to the total market value of the firm's common stock divided by (the replacement cost of the firm's assets less liabilities).

Since 1955,Canada bond yields and earnings yields on stocks were

The average duration of unemployment and changes in the consumer price index for services are _________.

Two firms,A and B,both produce widgets.The price of widgets is $1 each.Firm A has total fixed costs of $500,000 and variable costs of 50 cents per widget.Firm B has total fixed costs of $240,000 and variable costs of 75 cents per widget.The corporate tax rate is 40%.If the economy is strong,each firm will sell 1,200,000 widgets.If the economy enters a recession,each firm will sell 1,100,000 widgets.If the economy is strong,the after-tax profit of Firm A will be ______.

Assume that at the end of the next year,Company A will pay a $2.00 dividend per share,an increase from the current dividend of $1.50 per share.After that,the dividend is expected to increase at a constant rate of 5%.If you require a 12% return on the stock,the value of the stock is ________.

Questionable Systematic Risk Company is expected to pay a dividend of $3.50 in the coming year.Dividends are expected to grow at a rate of 10% per year.The risk-free rate of return is 5% and the expected return on the market portfolio is 13%.The stock is trading in the market today at a price of $90.00.What is the market capitalization rate for Questionable Systematic Risk?

If the currency of your country is depreciating,the result should be to ______ exports and to _______ imports.