Question 1

At your discount brokerage firm,it costs $7.95 per stock trade.How much money do you receive after selling 250 shares of General Electric (GE),which trades at $55.19?

Accepted Answer

A) $14,037.95 
B) $11,958.55 
C) $12,174.95 
D) $13,789.55 
A) $14,037.95 
B) $11,958.55 
C) $12,174.95 
D) $13,789.55

Question 2

Selling Stock with Commissions At your full-service brokerage firm,it costs $120 per stock trade.How much money do you receive after selling 200 shares of Ralph Lauren (RL),which trades at $85.13?

Accepted Answer

A) $16,546.00 
B) $16,906.00 
C) $17,026.00 
D) $17,146.00 
A) $16,546.00 
B) $16,906.00 
C) $17,026.00 
D) $17,146.00

Question 3

P/E Ratio Model and Future Price Walmart (WMT)recently earned a profit of $3.13 per share and has a P/E ratio of 14.22.The dividend has been growing at a 12.5 percent rate over the past few years.If this growth continues,what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio declined to 10 in five years?

Accepted Answer

A) $6.08, $5.04 respectively 
B) $72.22, $50.40 respectively 
C) $80.20, $56.40 respectively 
D) $86.46, $60.80 respectively 
A) $6.08, $5.04 respectively 
B) $72.22, $50.40 respectively 
C) $80.20, $56.40 respectively 
D) $86.46, $60.80 respectively

Question 4

Buying Stock with Commission At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 100 shares of Ralph Lauren (RL),which trades at $85.13?

Accepted Answer

A) $8,503.05 
B) $8,503.00 
C) $8,522.95 
D) $9,508.00 
A) $8,503.05 
B) $8,503.00 
C) $8,522.95 
D) $9,508.00

Question 5

Dividend Growth Annual dividends of Wal-Mart Stores (WMT)grew from $0.23 in 2000 to $0.83 in 2007.What was the annual growth rate?

Accepted Answer

A) 2.61 percent 
B) 20.12 percent 
C) 37.29 percent 
D) 260.87 percent 
A) 2.61 percent 
B) 20.12 percent 
C) 37.29 percent 
D) 260.87 percent

Question 6

Investors sell stock at the:

Accepted Answer

A) dealer price. 
B) bid price. 
C) quoted ask price. 
D) broker price. 
A) dealer price. 
B) bid price. 
C) quoted ask price. 
D) broker price.

Question 7

What are the differences between common stock and preferred stock?

Accepted Answer

Common stock dividends can increase over

Question 8

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

Accepted Answer

A) 4.73 percent 
B) 4.41 percent 
C) 5.91 percent 
D) 6.14 percent 
A) 4.73 percent 
B) 4.41 percent 
C) 5.91 percent 
D) 6.14 percent

Question 9

Value of a Preferred Stock If a preferred stock from Pfizer Inc.(PFE)pays $3.00 in annual dividends,and the required return on the preferred stock is 7 percent,what's the value of the stock?

Accepted Answer

A) $0.21 
B) $0.43 
C) $21.00 
D) $42.86 
A) $0.21 
B) $0.43 
C) $21.00 
D) $42.86

Question 10

Trading at physical exchanges like the New York Stock Exchange and the American Stock Exchange takes place:

Accepted Answer

A) at dealers' trading posts. 
B) at brokers' trading posts. 
C) at dealers' computers. 
D) at market markers. 
A) at dealers' trading posts. 
B) at brokers' trading posts. 
C) at dealers' computers. 
D) at market markers.

Question 11

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 percent on this stock,what is this stock's growth rate?

Accepted Answer

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

Question 12

Value stocks are:

Accepted Answer

A) stocks that are expected to exhibit high growth. 
B) stocks that have low P/E ratios and are selling at a bargain price. 
C) stocks that have high valuation ratios, such as P/E. 
D) none of these. 
A) stocks that are expected to exhibit high growth. 
B) stocks that have low P/E ratios and are selling at a bargain price. 
C) stocks that have high valuation ratios, such as P/E. 
D) none of these.

Question 13

A firm's stock is selling at $95.00 per share.Its growth rate is 10 percent and investors demand 15 percent on this stock.What is the firm's expected dividend?

Accepted Answer

A) $4.75 
B) $5.95 
C) $6.25 
D) $5.50 
A) $4.75 
B) $5.95 
C) $6.25 
D) $5.50

Question 14

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

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 15

P/E Ratio Model and Future Price Target Corp.(TGT)recently earned a profit of $3.57 earnings per share and has a P/E ratio of 17.3.The dividend has been growing at a 14 percent rate over the past few years.If this growth continues,what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 23 in five years?

Accepted Answer

A) $118.85, $158.01 respectively 
B) $137.19, $182.39 respectively 
C) $173.87, $231.15 respectively 
D) $308.81, $410.55 respectively 
A) $118.85, $158.01 respectively 
B) $137.19, $182.39 respectively 
C) $173.87, $231.15 respectively 
D) $308.81, $410.55 respectively

Question 16

Value of Dividends and Future Price A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year.Financial analysts believe the stock will be at their target price of $80.00 in two years.Compute the value of this stock with a required return of 13 percent.

Accepted Answer

A) $50.00 
B) $67.52 
C) $67.82 
D) $86.21 
A) $50.00 
B) $67.52 
C) $67.82 
D) $86.21

Question 17

GEN has 1 million shares outstanding and a P/E ratio of 12.Its earnings per share is $2.00.What is GEN's market capitalization?

Accepted Answer

A) $24,000,000 
B) $12,000,000 
C) $2,000,000 
D) $96,000,000 
A) $24,000,000 
B) $12,000,000 
C) $2,000,000 
D) $96,000,000

Question 18

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 19

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 20

P/E Ratio and Stock Price Ralph Lauren (RL)has earnings per share of $3.85 and a P/E ratio of 17.37.What is the stock price?

Accepted Answer

A) $0.22 
B) $4.51 
C) $22.16 
D) $66.87 
A) $0.22 
B) $4.51 
C) $22.16 
D) $66.87

At your discount brokerage firm,it costs $7.95 per stock trade.How much money do you receive after selling 250 shares of General Electric (GE),which trades at $55.19?

Selling Stock with Commissions At your full-service brokerage firm,it costs $120 per stock trade.How much money do you receive after selling 200 shares of Ralph Lauren (RL),which trades at $85.13?

Buying Stock with Commission At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 100 shares of Ralph Lauren (RL),which trades at $85.13?

Dividend Growth Annual dividends of Wal-Mart Stores (WMT)grew from $0.23 in 2000 to $0.83 in 2007.What was the annual growth rate?

Investors sell stock at the:

What are the differences between common stock and preferred stock?

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

Value of a Preferred Stock If a preferred stock from Pfizer Inc.(PFE)pays $3.00 in annual dividends,and the required return on the preferred stock is 7 percent,what's the value of the stock?

Trading at physical exchanges like the New York Stock Exchange and the American Stock Exchange takes place:

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 percent on this stock,what is this stock's growth rate?

Value stocks are:

A firm's stock is selling at $95.00 per share.Its growth rate is 10 percent and investors demand 15 percent on this stock.What is the firm's expected dividend?

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

Value of Dividends and Future Price A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year.Financial analysts believe the stock will be at their target price of $80.00 in two years.Compute the value of this stock with a required return of 13 percent.

GEN has 1 million shares outstanding and a P/E ratio of 12.Its earnings per share is $2.00.What is GEN's market capitalization?

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

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?

P/E Ratio and Stock Price Ralph Lauren (RL)has earnings per share of $3.85 and a P/E ratio of 17.37.What is the stock price?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

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 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 Stockspart

At your discount brokerage firm,it costs $7.95 per stock trade.How much money do you receive after selling 250 shares of General Electric (GE),which trades at $55.19?

Selling Stock with Commissions At your full-service brokerage firm,it costs $120 per stock trade.How much money do you receive after selling 200 shares of Ralph Lauren (RL),which trades at $85.13?

Buying Stock with Commission At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 100 shares of Ralph Lauren (RL),which trades at $85.13?

Dividend Growth Annual dividends of Wal-Mart Stores (WMT)grew from $0.23 in 2000 to $0.83 in 2007.What was the annual growth rate?

Investors sell stock at the:

What are the differences between common stock and preferred stock?

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

Value of a Preferred Stock If a preferred stock from Pfizer Inc.(PFE)pays $3.00 in annual dividends,and the required return on the preferred stock is 7 percent,what's the value of the stock?

Trading at physical exchanges like the New York Stock Exchange and the American Stock Exchange takes place:

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 percent on this stock,what is this stock's growth rate?

Value stocks are:

A firm's stock is selling at $95.00 per share.Its growth rate is 10 percent and investors demand 15 percent on this stock.What is the firm's expected dividend?

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

Value of Dividends and Future Price A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year.Financial analysts believe the stock will be at their target price of $80.00 in two years.Compute the value of this stock with a required return of 13 percent.

GEN has 1 million shares outstanding and a P/E ratio of 12.Its earnings per share is $2.00.What is GEN's market capitalization?

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

P/E Ratio and Stock Price Ralph Lauren (RL)has earnings per share of $3.85 and a P/E ratio of 17.37.What is the stock price?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

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 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