Exam 15: Options Markets

A preferred stock will pay a dividend of $3.50 in the upcoming year,and every year thereafter,i.e. ,dividends are not expected to grow.You require a return of 11% on this stock.Use the constant growth DDM to calculate the intrinsic value of this preferred stock.

Inflation

Fiscal policy is difficult to implement quickly because

For most firms,P/E ratios and risk

In the consolidation stage of the industry life-cycle

Fiscal policy generally has a _______ direct impact than monetary policy on the economy,and the formulation and implementation of fiscal policy is ______ than that of monetary policy.

Because the DDM requires multiple estimates,investors should

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 B will be _________.

Which of the following are comparative valuation ratios? I.the plowback ratio II.the price-to-book ratio III.the dividend payout ratio IV.the price-to-sales ratio V.the price-to-cash flow ratio

Recent empirical research indicates ______.

_________ is equal to (common shareholders' equity/common shares outstanding).

Old Quartz Gold Mining Company is expected to pay a dividend of $8 in the upcoming year.Dividends are expected to decline at the rate of 2% per year.The risk-free rate of return is 6% and the expected return on the market portfolio is 14%.The stock of Old Quartz Gold Mining Company has a beta of -0.25.The return you should require on the stock is _______.

The _______ is defined as the present value of all cash proceeds to the investor in the stock.

High Fly Airline is expected to pay a dividend of $7 in the coming year.Dividends are expected to grow at the rate of 15% per year.The risk-free rate of return is 6% and the expected return on the market portfolio is 14%.The stock of High Fly Airline has a beta of 3.00.The return you should require on the stock is ________.

The industry life cycle is described by the following stages

The present value of growth opportunities (PVGO)is equal to I.the difference between a stock's price and its no-growth value per share. II.the stock's price III.zero if its return on equity equals the discount rate. IV.the net present value of favorable investment opportunities.

The growth in dividends of ABC,Inc.is expected to be 15%/year for the next three years,followed by a growth rate of 8%/year for two years;after this five year period,the growth in dividends is expected to be 3%/year,indefinitely.The required rate of return on ABC,Inc.is 13%.Last year's dividends per share were $1.85.What should the stock sell for today?

If Dominion's intrinsic value is $21.00 today,what must be its growth rate?

Bonded Paper Company has a balance sheet which lists $85 million in assets,$40 million in liabilities and $45 million in common shareholders' equity.It has 1,400,000 common shares outstanding.The replacement cost of the assets is $115 million.The market share price is $90.What is Bonded Paper's book value per share?

The most widely used monetary tool is _______.