Question 1

JUJU's dividend next year is expected to be $1.50.It is trading at $45 and is expected to grow at 9 percent per year.What is JUJU's dividend yield and capital gain?

Accepted Answer

A)  1.5 percent; 6 percent 
B)  9 percent; 3.33 percent 
C)  3.33 percent; 9 percent 
D)  6 percent; 1.5 percent 
A)  1.5 percent; 6 percent 
B)  9 percent; 3.33 percent 
C)  3.33 percent; 9 percent 
D)  6 percent; 1.5 percent

Question 2

Which of these investors earn returns from receiving dividends and from stock price appreciation?

Accepted Answer

A)  Bondholders 
B)  Stockholders 
C)  Investment bankers 
D)  Managers 
A)  Bondholders 
B)  Stockholders 
C)  Investment bankers 
D)  Managers

Question 3

Value stocks usually have:

Accepted Answer

A)  low P/E ratios and high growth rates. 
B)  high P/E ratios and low growth rates. 
C)  low P/E ratios and low growth rates. 
D)  high P/E ratios and high growth rates. 
A)  low P/E ratios and high growth rates. 
B)  high P/E ratios and low growth rates. 
C)  low P/E ratios and low growth rates. 
D)  high P/E ratios and high growth rates.

Question 4

ABC has a net profit margin of 4.3 percent on Sales of $12,000,000.The firm has 250,000 shares outstanding.If the firm's P/E is 16 times,how much is the stock selling for?

Accepted Answer

A)  $41.72 
B)  $35.96 
C)  $25.40 
D)  $33.02 
A)  $41.72 
B)  $35.96 
C)  $25.40 
D)  $33.02

Question 5

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 the options. 
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 the options.

Question 6

The Dow Jones Industrial Average (DJIA)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 7

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 8

A firm does not pay a dividend.It is expected to pay its first dividend of $1.50 per share in three years.This dividend will grow at 6 percent indefinitely.Using a 10 percent discount rate,compute the value of this stock.

Accepted Answer

A)  $29.86 
B)  $30.99 
C)  $41.25 
D)  $42.79 
A)  $29.86 
B)  $30.99 
C)  $41.25 
D)  $42.79

Question 9

At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 200 shares of General Electric (GE),which trades at $45.19?

Accepted Answer

A)  $9,038.00 
B)  $4,528.95 
C)  $9,047.95 
D)  $4,595.95 
A)  $9,038.00 
B)  $4,528.95 
C)  $9,047.95 
D)  $4,595.95

Question 10

A stock is expected to pay a $1.00 dividend per share.The growth rate is expected to be 4 percent.If investors demand 10 percent on this stock,what is the expected price of the stock 10 years from now?

Accepted Answer

A)  $24.68 
B)  $22.17 
C)  $25.00 
D)  $26.93 
A)  $24.68 
B)  $22.17 
C)  $25.00 
D)  $26.93

Question 11

Campbell Soup Co.paid a $1.55 dividend per share in 2012,which grew to $1.95 in 2017.This growth is expected to continue.What is the value of this stock at the beginning of 2017 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 12

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 the 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 the statements are correct.

Question 13

American Eagle Outfitters (AEO)recently paid a $0.38 dividend.The dividend is expected to grow at a 15.5 percent rate.At the current stock price of $24.07,what is the return shareholders are expecting?

Accepted Answer

A)  15.50 percent 
B)  15.52 percent 
C)  17.08 percent 
D)  17.32 percent 
A)  15.50 percent 
B)  15.52 percent 
C)  17.08 percent 
D)  17.32 percent

Question 14

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

Question 15

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 16

Suppose that a firm's recent earnings per share and dividends per share are $5.00 and $1.00,respectively.Both are expected to grow at 5 percent.However,the firm's current P/E ratio of 18 seems high for this growth rate.The P/E ratio is expected to fall to 10 within five years.Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years.Then discount these cash flows using a 12 percent required rate.

Accepted Answer

A)  $32.51 
B)  $40.35 
C)  $50.00 
D)  $63.81 
A)  $32.51 
B)  $40.35 
C)  $50.00 
D)  $63.81

Question 17

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 18

At your discount brokerage firm,it costs $8.50 per stock trade.How much money do you need to buy 200 shares of Apple (AAPL),which trades at $171.54?

Accepted Answer

A)  $32,608.00 
B)  $34,299.50 
C)  $34,316.50 
D)  $36,008.00 
A)  $32,608.00 
B)  $34,299.50 
C)  $34,316.50 
D)  $36,008.00

Question 19

At your discount brokerage firm,it costs $10.50 per stock trade.How much money do you need to buy 100 shares of Apple (AAPL),which trades at $202.64?

Accepted Answer

A)  $20,253.50 
B)  $20,264.00 
C)  $20,274.50 
D)  $21,314.00 
A)  $20,253.50 
B)  $20,264.00 
C)  $20,274.50 
D)  $21,314.00

JUJU's dividend next year is expected to be $1.50.It is trading at $45 and is expected to grow at 9 percent per year.What is JUJU's dividend yield and capital gain?

Which of these investors earn returns from receiving dividends and from stock price appreciation?

Value stocks usually have:

ABC has a net profit margin of 4.3 percent on Sales of $12,000,000.The firm has 250,000 shares outstanding.If the firm's P/E is 16 times,how much is the stock selling for?

Value stocks are:

The Dow Jones Industrial Average (DJIA)includes:

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?

A firm does not pay a dividend.It is expected to pay its first dividend of $1.50 per share in three years.This dividend will grow at 6 percent indefinitely.Using a 10 percent discount rate,compute the value of this stock.

At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 200 shares of General Electric (GE),which trades at $45.19?

A stock is expected to pay a $1.00 dividend per share.The growth rate is expected to be 4 percent.If investors demand 10 percent on this stock,what is the expected price of the stock 10 years from now?

Campbell Soup Co.paid a $1.55 dividend per share in 2012,which grew to $1.95 in 2017.This growth is expected to continue.What is the value of this stock at the beginning of 2017 when the required return is 10.5 percent?

Which of the following statements is incorrect?

American Eagle Outfitters (AEO)recently paid a $0.38 dividend.The dividend is expected to grow at a 15.5 percent rate.At the current stock price of $24.07,what is the return shareholders are expecting?

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

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?

At your discount brokerage firm,it costs $8.50 per stock trade.How much money do you need to buy 200 shares of Apple (AAPL),which trades at $171.54?

At your discount brokerage firm,it costs $10.50 per stock trade.How much money do you need to buy 100 shares of Apple (AAPL),which trades at $202.64?

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

Filters

Exam 8: Valuing Stocks

JUJU's dividend next year is expected to be $1.50.It is trading at $45 and is expected to grow at 9 percent per year.What is JUJU's dividend yield and capital gain?

Which of these investors earn returns from receiving dividends and from stock price appreciation?

Value stocks usually have:

ABC has a net profit margin of 4.3 percent on Sales of $12,000,000.The firm has 250,000 shares outstanding.If the firm's P/E is 16 times,how much is the stock selling for?

Value stocks are:

The Dow Jones Industrial Average (DJIA)includes:

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?

A firm does not pay a dividend.It is expected to pay its first dividend of $1.50 per share in three years.This dividend will grow at 6 percent indefinitely.Using a 10 percent discount rate,compute the value of this stock.

At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 200 shares of General Electric (GE),which trades at $45.19?

A stock is expected to pay a $1.00 dividend per share.The growth rate is expected to be 4 percent.If investors demand 10 percent on this stock,what is the expected price of the stock 10 years from now?

Campbell Soup Co.paid a $1.55 dividend per share in 2012,which grew to $1.95 in 2017.This growth is expected to continue.What is the value of this stock at the beginning of 2017 when the required return is 10.5 percent?

Which of the following statements is incorrect?

American Eagle Outfitters (AEO)recently paid a $0.38 dividend.The dividend is expected to grow at a 15.5 percent rate.At the current stock price of $24.07,what is the return shareholders are expecting?

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

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?

At your discount brokerage firm,it costs $8.50 per stock trade.How much money do you need to buy 200 shares of Apple (AAPL),which trades at $171.54?

At your discount brokerage firm,it costs $10.50 per stock trade.How much money do you need to buy 100 shares of Apple (AAPL),which trades at $202.64?

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

Filters