Question 1

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

Accepted Answer

A)  $89,250,000,000 
B)  $89,250,000 
C)  $892,500,000 
D)  $892,500 
A)  $89,250,000,000 
B)  $89,250,000 
C)  $892,500,000 
D)  $892,500

Question 2

A firm's stock is selling at $75.00 per share. Its growth rate is 10% and investors demand 17% on this stock. What is the firm's expected dividend?

Accepted Answer

A)  $4.75 
B)  $5.95 
C)  $6.25 
D)  $5.25 
A)  $4.75 
B)  $5.95 
C)  $6.25 
D)  $5.25

Question 3

A firm is expected to pay a $2.00 dividend per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10% on this stock, what is this stock's growth rate?

Accepted Answer

A)  4.73% 
B)  5.92% 
C)  6.00% 
D)  7.29% 
A)  4.73% 
B)  5.92% 
C)  6.00% 
D)  7.29%

Question 4

JPM has earnings per share of $3.75 and P/E of 47. What is the stock price?

Accepted Answer

A)  $174.08 
B)  $176.25 
C)  $185.95 
D)  $112.98 
A)  $174.08 
B)  $176.25 
C)  $185.95 
D)  $112.98

Question 5

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -3%. Its recent divided was $2.50. What is the value of this stock when the required return is 7%?

Accepted Answer

A)  $28.17 
B)  $24.25 
C)  $17.42 
D)  $15.53 
A)  $28.17 
B)  $24.25 
C)  $17.42 
D)  $15.53

Question 6

JUJU's dividend next year is expected to be $5.50. It is trading at $45 and is expected to grow at 4% per year. What is JUJU's dividend yield and capital gain?

Accepted Answer

A)  2.5%; 6% 
B)  12.22%; 4% 
C)  4%; 12.22% 
D)  6%; 2.5% 
A)  2.5%; 6% 
B)  12.22%; 4% 
C)  4%; 12.22% 
D)  6%; 2.5%

Question 7

Campbell Soup Co paid a $1.55 dividend per share in 2004, which grew to $1.95 in 2009. This growth is expected to continue. What is the value of this stock at the beginning of 2010 when the required return is 10.5 percent?

Accepted Answer

A)  $35.20 
B)  $34.16 
C)  $33.48 
D)  $32.17 
A)  $35.20 
B)  $34.16 
C)  $33.48 
D)  $32.17

Question 8

When might the constant growth model not be used?

Accepted Answer

If growth is greater than or equal to th

Question 9

A fast growing firm recently paid a dividend of $1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?

Accepted Answer

A)  $33.54 
B)  $37.99 
C)  $39.37 
D)  $42.03 
A)  $33.54 
B)  $37.99 
C)  $39.37 
D)  $42.03

Question 10

Many companies grow very fast at first, but slower future growth can be expected. Such companies are called

Accepted Answer

A)  Fortune 500 companies 
B)  Blue Chip companies 
C)  Variable Growth Rate firms 
D)  Constant Growth Rate firms 
A)  Fortune 500 companies 
B)  Blue Chip companies 
C)  Variable Growth Rate firms 
D)  Constant Growth Rate firms

Question 11

Which of the following statements is incorrect?

Accepted Answer

A)  Preferred stock prices fluctuate with market interest rates and behave like corporate bond prices. 
B)  Common stock price changes with the value of the company's underlying business. 
C)  Preferred stockholders have higher precedence for payment in the event of firm liquidation from bankruptcy. 
D)  All of these statements are correct. 
A)  Preferred stock prices fluctuate with market interest rates and behave like corporate bond prices. 
B)  Common stock price changes with the value of the company's underlying business. 
C)  Preferred stockholders have higher precedence for payment in the event of firm liquidation from bankruptcy. 
D)  All of these statements are correct.

Question 12

Variable Growth A fast growing firm recently paid a dividend of $0.50 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 15 percent discount rate is appropriate for this stock, what is its value?

Accepted Answer

A)  $5.00 
B)  $22.62 
C)  $25.75 
D)  $36.46 
A)  $5.00 
B)  $22.62 
C)  $25.75 
D)  $36.46

Question 13

A stock is expected to pay a $5.00 dividend per share. The growth rate is expected to be -2%. If investors demand 8% on this stock, what is the expected price of the stock 5 years from now?

Accepted Answer

A)  $54.68 
B)  $45.20 
C)  $41.06 
D)  $53.12 
A)  $54.68 
B)  $45.20 
C)  $41.06 
D)  $53.12

Question 14

A firm is expected to pay a $4.00 dividend per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12% on this stock, what is this stock's growth rate?

Accepted Answer

A)  4.73% 
B)  7.25% 
C)  5.91% 
D)  6.14% 
A)  4.73% 
B)  7.25% 
C)  5.91% 
D)  6.14%

Question 15

The Standard & Poor's 500 Index includes

Accepted Answer

A)  all of the stock listed on the New York Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine. 
A)  all of the stock listed on the New York Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine.

Question 16

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -2%. Its recent divided was $2.00. What is the value of this stock when the required return is 9%?

Accepted Answer

A)  $28.00 
B)  $29.14 
C)  $17.82 
D)  $15.52 
A)  $28.00 
B)  $29.14 
C)  $17.82 
D)  $15.52

Question 17

Selling Stock with a Limit Order You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are $96.24 and $96.17, respectively. You place a limit sell-order at $96.20. If the trade executes, how much money do you receive from the buyer?

Accepted Answer

A)  $38,464.00 
B)  $38,468.00 
C)  $38,480.00 
D)  $38,496.00 
A)  $38,464.00 
B)  $38,468.00 
C)  $38,480.00 
D)  $38,496.00

Question 18

Explain the characteristics of preferred stock.

Accepted Answer

A stock with a zero dividend growth rate

Question 19

Constant Growth Stock Valuation Best Buy Co (BBY) paid a $0.27 dividend per share in 2003, which grew to $0.49 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent?

Accepted Answer

A)  $2.84 
B)  $42.24 
C)  $49.03 
D)  $50.78 
A)  $2.84 
B)  $42.24 
C)  $49.03 
D)  $50.78

Question 20

What ten sectors of the economy are represented in the S&P 500 Index?

Accepted Answer

Financial
Information Technolo

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

A firm's stock is selling at $75.00 per share. Its growth rate is 10% and investors demand 17% on this stock. What is the firm's expected dividend?

A firm is expected to pay a $2.00 dividend per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10% on this stock, what is this stock's growth rate?

JPM has earnings per share of $3.75 and P/E of 47. What is the stock price?

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -3%. Its recent divided was $2.50. What is the value of this stock when the required return is 7%?

JUJU's dividend next year is expected to be $5.50. It is trading at $45 and is expected to grow at 4% per year. What is JUJU's dividend yield and capital gain?

Campbell Soup Co paid a $1.55 dividend per share in 2004, which grew to $1.95 in 2009. This growth is expected to continue. What is the value of this stock at the beginning of 2010 when the required return is 10.5 percent?

When might the constant growth model not be used?

A fast growing firm recently paid a dividend of $1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?

Many companies grow very fast at first, but slower future growth can be expected. Such companies are called

Which of the following statements is incorrect?

A stock is expected to pay a $5.00 dividend per share. The growth rate is expected to be -2%. If investors demand 8% on this stock, what is the expected price of the stock 5 years from now?

A firm is expected to pay a $4.00 dividend per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12% on this stock, what is this stock's growth rate?

The Standard & Poor's 500 Index includes

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -2%. Its recent divided was $2.00. What is the value of this stock when the required return is 9%?

Selling Stock with a Limit Order You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are $96.24 and $96.17, respectively. You place a limit sell-order at $96.20. If the trade executes, how much money do you receive from the buyer?

Explain the characteristics of preferred stock.

Constant Growth Stock Valuation Best Buy Co (BBY) paid a $0.27 dividend per share in 2003, which grew to $0.49 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent?

What ten sectors of the economy are represented in the S&P 500 Index?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 8: Valuing Stocks

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

A firm's stock is selling at $75.00 per share. Its growth rate is 10% and investors demand 17% on this stock. What is the firm's expected dividend?

A firm is expected to pay a $2.00 dividend per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10% on this stock, what is this stock's growth rate?

JPM has earnings per share of $3.75 and P/E of 47. What is the stock price?

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -3%. Its recent divided was $2.50. What is the value of this stock when the required return is 7%?

JUJU's dividend next year is expected to be $5.50. It is trading at $45 and is expected to grow at 4% per year. What is JUJU's dividend yield and capital gain?

Campbell Soup Co paid a $1.55 dividend per share in 2004, which grew to $1.95 in 2009. This growth is expected to continue. What is the value of this stock at the beginning of 2010 when the required return is 10.5 percent?

When might the constant growth model not be used?

A fast growing firm recently paid a dividend of $1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?

Many companies grow very fast at first, but slower future growth can be expected. Such companies are called

Which of the following statements is incorrect?

A stock is expected to pay a $5.00 dividend per share. The growth rate is expected to be -2%. If investors demand 8% on this stock, what is the expected price of the stock 5 years from now?

A firm is expected to pay a $4.00 dividend per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12% on this stock, what is this stock's growth rate?

The Standard & Poor's 500 Index includes

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -2%. Its recent divided was $2.00. What is the value of this stock when the required return is 9%?

Selling Stock with a Limit Order You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are $96.24 and $96.17, respectively. You place a limit sell-order at $96.20. If the trade executes, how much money do you receive from the buyer?

Explain the characteristics of preferred stock.

Constant Growth Stock Valuation Best Buy Co (BBY) paid a $0.27 dividend per share in 2003, which grew to $0.49 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent?

What ten sectors of the economy are represented in the S&P 500 Index?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters