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Healthy Foods just paid its annual dividend of $1.45 a share.The firm recently announced that all future dividends will be increased by 2.8 percent annually.What is one share of this stock worth to you if you require a 14 percent rate of return?


A) $12.56
B) $12.95
C) $13.31
D) $13.68
E) $14.07

F) A) and B)
G) A) and D)

Correct Answer

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A broker is an agent who:


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) C) and D)
G) None of the above

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


A) Dividend yield
B) Capital gains yield
C) Total return
D) Market value per share
E) Book value per share

F) A) and E)
G) C) and E)

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The stock price of Russell,Inc.is $81.Investors require a 14 percent rate of return on similar stocks.If the company plans to pay a dividend of $4.20 next year,what growth rate is expected for the company's stock price?


A) 7.99 percent
B) 8.00 percent
C) 8.12 percent
D) 8.37 percent
E) 8.81 percent

F) A) and B)
G) C) and D)

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Given the following partial stock quote,what was the closing price on the previous trading day if the firm's earnings per share are $1.90? Given the following partial stock quote,what was the closing price on the previous trading day if the firm's earnings per share are $1.90? A) $16.71 B) $16.77 C) $16.89 D) $17.09 E) $17.40


A) $16.71
B) $16.77
C) $16.89
D) $17.09
E) $17.40

F) C) and E)
G) None of the above

Correct Answer

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Santa Klaus Toys just paid its annual dividend of $1.40.The required return is 8 percent and the dividend growth rate is 1 percent.What is the expected value of this stock five years from now?


A) $20.82
B) $21.23
C) $22.06
D) $23.45
E) $23.78

F) A) and E)
G) B) and C)

Correct Answer

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What is the market called that allows shareholders to resell their shares to other investors?


A) Primary
B) Proxy
C) Secondary
D) Inside
E) Initial

F) B) and D)
G) A) and E)

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The common stock of Sweet Treats is valued at $10.80 a share.The company increases its dividend by 8 percent annually and expects its next dividend to be $0.40 per share.What is the total rate of return on this stock?


A) 8.00 percent
B) 11.07 percent
C) 11.17 percent
D) 11.70 percent
E) 12.00 percent

F) B) and D)
G) A) and B)

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Aardvark,Inc.pays a constant annual dividend.At the end of trading on Wednesday,the price of its stock was $28.At the end of trading on the following day,the stock price was $27.As a result of the decline in the stock's price,the dividend yield _____ while the capital gains yield ____.


A) remained constant; remained constant
B) increased; remained constant
C) increased; increased
D) decreased; remained constant
E) decreased; decreased

F) All of the above
G) C) and D)

Correct Answer

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How is the stated value of a preferred stock utilized?

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The stated value of a preferre...

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Shoreline Foods pays a constant annual dividend of $1.60 a share and currently sells for $28.50 a share.What is the rate of return?


A) 4.56 percent
B) 5.39 percent
C) 5.61 percent
D) 6.63 percent
E) 6.91 percent

F) A) and B)
G) A) and C)

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The Three Amigos Restaurant just paid an annual dividend of $4.20 per share and is expected to pay annual dividends of $4.40 and $4.50 per share the next two years,respectively.After that,the firm expects to maintain a constant dividend growth rate of 2 percent per year.What is the value of this stock today if the required return is 15 percent?


A) $27.64
B) $29.61
C) $30.66
D) $33.05
E) $33.93

F) A) and B)
G) B) and C)

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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?


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

F) B) and E)
G) C) and D)

Correct Answer

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The price of a stock at year 4 can be expressed as:


A) D0/(R + g4) .
B) D0 × (1 + R) 5.
C) D1 × (1 + R) 5.
D) D4/(R - g) .
E) D5/(R - g) .

F) B) and D)
G) A) and D)

Correct Answer

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An agent who buys and sells securities from inventory is called a:


A) floor trader.
B) dealer.
C) commission broker.
D) broker.
E) floor broker.

F) All of the above
G) C) and D)

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Brickhouse is expected to pay annual dividends of $1.90 and $2.10 over the next two years,respectively.After that,the company expects to pay a constant dividend of $2.30 a share.What is the value of this stock at a required return of 16 percent?


A) $12.44
B) $13.30
C) $13.89
D) $14.08
E) $14.60

F) A) and E)
G) B) and E)

Correct Answer

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Spiral Staircase is offering preferred stock which is commonly referred to as 10-10 stock.This stock will pay an annual dividend of $10 a share starting 10 years from now.What is this stock worth to you today if you desire a 15 percent rate of return?


A) $16.70
B) $18.95
C) $19.63
D) $20.52
E) $20.94

F) A) and E)
G) D) and E)

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The common stock of Up-Towne Movers is selling for $33 a share and has a 10 percent rate of return.The growth rate of the dividends is 2 percent annually.What is the amount of the next annual dividend?


A) $2.58
B) $2.61
C) $2.64
D) $2.67
E) $2.70

F) B) and C)
G) A) and D)

Correct Answer

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A preferred stock sells for $48.20 a share and has a market return of 15.65 percent.What is the dividend amount?


A) $6.93
B) $6.80
C) $7.25
D) $7.42
E) $7.54

F) A) and C)
G) None of the above

Correct Answer

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The next dividend payment by Swenson,Inc.will be $1.80 per share.The dividends are anticipated to maintain a 5.5 percent growth rate,forever.If the stock currently sells for $48.50 per share,what is the required return?


A) 8.20 percent
B) 8.88 percent
C) 9.21 percent
D) 9.74 percent
E) 10.02 percent

F) B) and D)
G) A) and D)

Correct Answer

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