Question 1

A broker is an agent who:

Accepted Answer

A)  trades on the floor of an exchange for himself or herself.
B)  buys and sells from inventory.
C)  offers new securities for sale to dealers only.
D)  is ready to buy or sell at any time.
E)  brings buyers and sellers together.F) A) and E)
G) None of the above

Question 2

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Accepted Answer

A)  National
B)  Capital
C)  Regional
D)  Global Select
E)  GlobalF) B) and C)
G) C) and D)

Question 3

Juniper Trees has earnings per share of $1.38, all of which is added to retained earnings.What is the value of a share of its stock if the PE ratio is 9.8 and market-to-book ratio is 2.5?

Accepted Answer

A)  $13.52
B)  $13.67
C)  $15.30
D)  $33.80
E)  $34.18F) A) and E)
G) A) and B)

Question 4

The common stock of Big Marvin Treats has a total return of 10.25 percent, a stock price of $28.75, and recently paid an annual dividend of $1.65.What is the capital gains rate if the company maintains a constant dividend?

Accepted Answer

A)  7.54 percent
B)  15.76 percent
C)  10.37 percent
D)  4.51 percent
E)  3.79 percentF) All of the above
G) C) and D)

Question 5

Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent.What is the amount of the last dividend this company paid?

Accepted Answer

A)  $1.05
B)  $1.55
C)  $1.60
D)  $1.15
E)  $1.30F) B) and C)
G) A) and C)

Question 6

A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:

Accepted Answer

A)  supplemental liquidity provider (SLP) .
B)  designated market maker (DMM) .
C)  runner.
D)  Floor broker.
E)  market maker.F) A) and C)
G) B) and E)

Question 7

River City Recycling just paid its annual dividend of $1.15 per share.The required return is 12.3 percent and the dividend growth rate is 0.75 percent.What is the expected value of this stock five years from now?

Accepted Answer

A)  $10.16
B)  $10.41
C)  $12.03
D)  $8.42
E)  $9.75F) A) and B)
G) C) and D)

Question 8

River Rock, Inc., just paid an annual dividend of $2.80.The company has increased its dividend by 2.5 percent a year for the past 10 years and expects to continue doing so.What will a share of this stock be worth 6 years from now if the required return is 16 percent?

Accepted Answer

A)  $23.60
B)  $24.65
C)  $25.08
D)  $25.50
E)  $26.90F) A) and E)
G) D) and E)

Question 9

When valuing a stock using the constant-growth model, D1 represents the:

Accepted Answer

A)  expected difference in the stock price over the next year.
B)  expected stock price in one year.
C)  last annual dividend paid.
D)  the next expected annual dividend.
E)  discount rate.F) A) and D)
G) A) and E)

Question 10

Software Sales Supply is expected to pay its first annual dividend of $.1.10 per share in Year 3.Starting in Year 6, the company plans to increase the dividend by 3.2 percent per year.What is the value of this stock today, Year 0, at a required return of 13.1 percent?

Accepted Answer

A)  $8.22
B)  $11.31
C)  $11.49
D)  $10.35
E)  $12.66F) A) and B)
G) B) and D)

Question 11

A DMM is a(n) :

Accepted Answer

A)  employee who executes orders to buy and sell for clients of his or her brokerage firm.
B)  individual who trades on the floor of an exchange for his or her personal account.
C)  NYSE member who functions as a dealer for a limited number of securities.
D)  broker who buys and sells securities from a market maker.
E)  trader who deals only with primary offerings.F) B) and D)
G) A) and B)

Question 12

KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

Accepted Answer

A)  $4.49
B)  $3.57
C)  $5.30
D)  $4.15
E)  $4.36F) C) and D)
G) A) and D)

Question 13

For the past six years, the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.Currently, the stock is priced at $43.40 a share and has a required return of 11.65 percent.What is the dividend yield?

Accepted Answer

A)  3.20 percent
B)  2.75 percent
C)  3.69 percent
D)  4.28 percent
E)  3.44 percentF) B) and C)
G) C) and D)

Question 14

Graphic Designs has 68,000 shares of cumulative preferred stock outstanding.Preferred shareholders are supposed to be paid $1.60 per quarter per share in dividends.However, the firm has encountered financial problems and has not paid any dividends for the past three quarters.How much will the firm have to pay per share of preferred next quarter if the firm also wishes to pay a common stock dividend?

Accepted Answer

A)  $3.20
B)  $4.80
C)  $6.40
D)  $7.50
E)  $1.60F) B) and E)
G) All of the above

Question 15

Which one of the following must equal zero if a firm pays a constant annual dividend?

Accepted Answer

A)  Dividend yield
B)  Capital gains yield
C)  Total return
D)  Par value per share
E)  Book value per shareF) D) and E)
G) C) and E)

Question 16

Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?

Accepted Answer

A)  NASDAQ Capital Market
B)  Over-the-Counter Bulletin Board
C)  Pink sheets
D)  NASDAQ Global Market
E)  NYSEF) A) and D)
G) A) and C)

Question 17

A preferred stock sells for $54.20 a share and has a market return of 9.68 percent.What is the dividend amount?

Accepted Answer

A)  $5.09
B)  $5.14
C)  $4.75
D)  $5.42
E)  $5.25F) A) and B)
G) B) and D)

Question 18

Flash Freeze Frozen Foods is expected to pay annual dividends of $1.34 and $ 1.45 at the end of the next two years, respectively.After that, the company expects to pay a constant dividend of $1.50 a share.What is the value of this stock at a required return of 15.1 percent?

Accepted Answer

A)  $7.77
B)  $10.25
C)  $9.76
D)  $12.78
E)  $9.93F) A) and E)
G) B) and E)

Question 19

Last year, when the stock of Alpha Minerals was selling for $49.50 a share, the dividend yield was 3.4 percent.Today, the stock is selling for $41 a share.What is the total return on this stock if the company maintains a constant dividend growth rate of 2.2 percent?

Accepted Answer

A)  6.13 percent
B)  6.58 percent
C)  6.40 percent
D)  6.47 percent
E)  6.38 percentF) A) and B)
G) A) and D)

Question 20

The Chip Dip Co.has 685,500 shares of stock outstanding, grants one vote per share, and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are five open seats?

Accepted Answer

A)  335,167 shares
B)  345,134 shares
C)  345,876 shares
D)  342,751 shares
E)  337,134 sharesF) B) and D)
G) A) and B)

Exam 7: Equity Markets and Stock Valuation

Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?

Correct Answer
verified

KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

Correct Answer
verified

Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent.What is the amount of the last dividend this company paid?

Correct Answer
verified

For the past six years, the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.Currently, the stock is priced at $43.40 a share and has a required return of 11.65 percent.What is the dividend yield?

Correct Answer
verified

The Chip Dip Co.has 685,500 shares of stock outstanding, grants one vote per share, and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are five open seats?

Correct Answer
verified

Which one of the following must equal zero if a firm pays a constant annual dividend?

Correct Answer
verified

River City Recycling just paid its annual dividend of $1.15 per share.The required return is 12.3 percent and the dividend growth rate is 0.75 percent.What is the expected value of this stock five years from now?

Correct Answer
verified

A broker is an agent who:

Correct Answer
verified

Flash Freeze Frozen Foods is expected to pay annual dividends of $1.34 and $ 1.45 at the end of the next two years, respectively.After that, the company expects to pay a constant dividend of $1.50 a share.What is the value of this stock at a required return of 15.1 percent?

Correct Answer
verified

A preferred stock sells for $54.20 a share and has a market return of 9.68 percent.What is the dividend amount?

Correct Answer
verified

Juniper Trees has earnings per share of $1.38, all of which is added to retained earnings.What is the value of a share of its stock if the PE ratio is 9.8 and market-to-book ratio is 2.5?

Correct Answer
verified

A DMM is a(n) :

Correct Answer
verified

The common stock of Big Marvin Treats has a total return of 10.25 percent, a stock price of $28.75, and recently paid an annual dividend of $1.65.What is the capital gains rate if the company maintains a constant dividend?

Correct Answer
verified

River Rock, Inc., just paid an annual dividend of $2.80.The company has increased its dividend by 2.5 percent a year for the past 10 years and expects to continue doing so.What will a share of this stock be worth 6 years from now if the required return is 16 percent?

Correct Answer
verified

Last year, when the stock of Alpha Minerals was selling for $49.50 a share, the dividend yield was 3.4 percent.Today, the stock is selling for $41 a share.What is the total return on this stock if the company maintains a constant dividend growth rate of 2.2 percent?

Correct Answer
verified

Software Sales Supply is expected to pay its first annual dividend of $.1.10 per share in Year 3.Starting in Year 6, the company plans to increase the dividend by 3.2 percent per year.What is the value of this stock today, Year 0, at a required return of 13.1 percent?

Correct Answer
verified

A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:

Correct Answer
verified

When valuing a stock using the constant-growth model, D₁represents the:

Correct Answer
verified

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Correct Answer
verified

Correct Answer
verified

Exam 7: Equity Markets and Stock Valuation

Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC?

Correct AnswerverifiedShow Answer

KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

Correct AnswerverifiedShow Answer

Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent.What is the amount of the last dividend this company paid?

Correct AnswerverifiedShow Answer

For the past six years, the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.Currently, the stock is priced at $43.40 a share and has a required return of 11.65 percent.What is the dividend yield?

Correct AnswerverifiedShow Answer

The Chip Dip Co.has 685,500 shares of stock outstanding, grants one vote per share, and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are five open seats?

Correct AnswerverifiedShow Answer

Which one of the following must equal zero if a firm pays a constant annual dividend?

Correct AnswerverifiedShow Answer

River City Recycling just paid its annual dividend of $1.15 per share.The required return is 12.3 percent and the dividend growth rate is 0.75 percent.What is the expected value of this stock five years from now?

Correct AnswerverifiedShow Answer

A broker is an agent who:

Correct AnswerverifiedShow Answer

Flash Freeze Frozen Foods is expected to pay annual dividends of $1.34 and $ 1.45 at the end of the next two years, respectively.After that, the company expects to pay a constant dividend of $1.50 a share.What is the value of this stock at a required return of 15.1 percent?

Correct AnswerverifiedShow Answer

A preferred stock sells for $54.20 a share and has a market return of 9.68 percent.What is the dividend amount?

Correct AnswerverifiedShow Answer

Juniper Trees has earnings per share of $1.38, all of which is added to retained earnings.What is the value of a share of its stock if the PE ratio is 9.8 and market-to-book ratio is 2.5?

Correct AnswerverifiedShow Answer

A DMM is a(n) :

Correct AnswerverifiedShow Answer

The common stock of Big Marvin Treats has a total return of 10.25 percent, a stock price of $28.75, and recently paid an annual dividend of $1.65.What is the capital gains rate if the company maintains a constant dividend?

Correct AnswerverifiedShow Answer

River Rock, Inc., just paid an annual dividend of $2.80.The company has increased its dividend by 2.5 percent a year for the past 10 years and expects to continue doing so.What will a share of this stock be worth 6 years from now if the required return is 16 percent?

Correct AnswerverifiedShow Answer

Last year, when the stock of Alpha Minerals was selling for $49.50 a share, the dividend yield was 3.4 percent.Today, the stock is selling for $41 a share.What is the total return on this stock if the company maintains a constant dividend growth rate of 2.2 percent?

Correct AnswerverifiedShow Answer

Software Sales Supply is expected to pay its first annual dividend of $.1.10 per share in Year 3.Starting in Year 6, the company plans to increase the dividend by 3.2 percent per year.What is the value of this stock today, Year 0, at a required return of 13.1 percent?

Correct AnswerverifiedShow Answer

A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a:

Correct AnswerverifiedShow Answer

When valuing a stock using the constant-growth model, D1 represents the:

Correct AnswerverifiedShow Answer

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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When valuing a stock using the constant-growth model, D₁represents the:

Correct Answer
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