公司理财英文版题库6

第135页CHAPTER6StockValuationI. DEFINITIONSGROWINGPERPETUITYa 1. Anassetcharacterizedbycashflowsthatincreaseataconstantrateforeveriscalleda: a. growingperpetuity. b. growingannuity. c. commonannuity. d. perpetuitydue. e. preferredstock. Difficultylevel:EasyDIVIDENDGROWTHMODELb 2. Thestockvaluationmodelthatdeterminesthecurrentstockpricebydividingthenextannualdividendamountbytheexcessofthediscountratelessthedividendgrowthrateiscalledthe_____model. a. zerogrowth b. dividendgrowth c. capitalpricing d. earningscapitalization e. discounteddividend Difficultylevel:EasyDIVIDENDYIELDc 3. Nextyear’sannualdividenddividedbythecurrentstockpriceiscalledthe: a. yieldtomaturity. b. totalyield. c. dividendyield. d. capitalgainsyield. e. earningsyield. Difficultylevel:EasyCAPITALGAINSYIELDd 4. Therateatwhichastock’spriceisexpectedtoappreciate(ordepreciate)iscalledthe_____yield. a. current b. total c. dividend d. capitalgains e. earnings Difficultylevel:EasyPREFERREDSTOCKd 5. Aformofequitywhichreceivespreferentialtreatmentinthepaymentofdividendsiscalled_____stock. a. dualclass b. cumulative c. deferred d. preferred e. common Difficultylevel:EasyPREFERREDSTOCKe 6. A_____isaformofequitysecuritythathasastatedliquidatingvalue. a. bond b. debenture c. proxy d. commonstock e. preferredstock Difficultylevel:MediumCOMMONSTOCKe 7. Aformofequitywhichreceivesnopreferentialtreatmentineitherthepaymentofdividendsorinbankruptcydistributionsiscalled_____stock. a. dualclass b. cumulative c. deferred d. preferred e. common Difficultylevel:EasyCUMULATIVEVOTINGb 8. Thevotingprocedurewherebyshareholdersmaycastalloftheirvotesforonememberoftheboardiscalled_____voting. a. democratic b. cumulative c. straight d. deferred e. proxy Difficultylevel:EasySTRAIGHTVOTINGc 9. Thevotingprocedurewhereyoumustown50%plusoneoftheoutstandingsharesofstocktoguaranteethatyouwillwinaseatontheboardofdirectorsiscalled_____voting. a. democratic b. cumulative c. straight d. deferred e. proxy Difficultylevel:EasyPROXYVOTINGe 10. Thevotingprocedurewhereashareholdergrantsauthoritytoanotherindividualtovotehis/hersharesiscalled_____voting. a. democratic b. cumulative c. straight d. deferred e. proxy Difficultylevel:EasyPREEMPTIVERIGHTSb 11. Preemptiverightsrefertotherightofshareholdersto: a. shareproportionatelyindividendspaid. b. shareproportionatelyinanynewstockissuessold. c. shareproportionatelyinliquidatedassets. d. voteatannualshareholdermeetings. e. overridethevotesofothershareholders. Difficultylevel:MediumDIVIDENDSc 12. Paymentsmadebyacorporationtoitsshareholders,intheformofeithercash,stockorpaymentsinkind,arecalled: a. retainedearnings. b. netincome. c. dividends. d. redistributions. e. infusedequity. Difficultylevel:EasyPRIMARYMARKETe 13. Themarketinwhichnewsecuritiesareoriginallysoldtoinvestorsiscalledthe_____market. a. dealer b. auction c. over-the-counter d. secondary e. primary Difficultylevel:EasySECONDARYMARKETd 14. Themarketinwhichpreviouslyissuedsecuritiesaretradedamonginvestorsiscalledthe_____market. a. dealer b. auction c. over-the-counter d. secondary e. primary Difficultylevel:EasyDEALERe 15. Anagentwhobuysandsellssecuritiesfrominventoryiscalleda: a. broker. b. trader. c. capitalist. d. principal. e. dealer. Difficultylevel:EasyBROKERa 16. Anagentwhoarrangessecuritytransactionsamonginvestorsiscalleda: a. broker. b. trader. c. capitalist. d. principal. e. dealer. Difficultylevel:EasyNYSEMEMBERb 17. TheownerofaseatontheNewYorkStockExchangeiscalleda(n)_____oftheexchange. a. friend b. member c. agent d. trustee e. dealer Difficultylevel:EasySPECIALISTc 18. AmemberoftheNewYorkStockExchangeactingasadealerinoneormoresecuritiesontheexchangeflooriscalleda: a. floortrader. b. floorpost. c. specialist. d. floorbroker. e. commissionbroker. Difficultylevel:EasyFLOORBROKERd 19. AmemberoftheNewYorkStockExchangewhoexecutesordersforcommissionbrokersonafeebasisisa: a. floortrader. b. dealer. c. specialist. d. floorbroker. e. flooragent. Difficultylevel:EasyCOMMISSIONBROKERe 20. AmemberoftheNewYorkStockExchangewhoexecutesbuyandsellordersfromcustomersoncetransmittedtotheexchangeflooriscalleda: a. floortrader. b. dealer. c. specialist. d. floorbroker. e. commissionbroker. Difficultylevel:EasyFLOORTRADERa 21. AmemberoftheNewYorkStockExchangewhotradesforhisorherownaccount,tryingtoanticipatetemporarypricefluctuations,iscalleda(n): a. floortrader. b. exchangecustomer. c. specialist. d. floorbroker. e. commissionbroker. Difficultylevel:EasySUPERDOTSYSTEMb 22. TheelectronicsystemusedbytheNewYorkStockExchangewhichenablesorderstobetransmitteddirectlytoaspecialistiscalledthe______system.. a. NASDAQ b. SuperDOT c. Instinet d. Internet e. brokerage. Difficultylevel:EasyORDERFLOWc 23. The________hasamultiplemarketmakersystemratherthanaspecialistsystem. a. NYSE. b. AMEX. c. NASDAQ. d. NIKKEI e. Noneoftheabove. Difficultylevel:EasyOVER-THE-COUNTERMARKETc 24. Asecuritiesmarketprimarilycomprisedofdealerswhobuyandsellfortheirowninventoriesisgenerallyreferredtoasa(n)______market. a. auction b. private c. over-the-counter d. regional e. electronicnetwork Difficultylevel:EasyECNsd 25. Electroniccommunicationsnetworks,orECNs,actto: a. increaseliquidity. b. increasecompetition. c. increasethecosttoinvest. d. A&B. e. A&C. Difficultylevel:MediumII. CONCEPTSVALUATIONOFZEROGROWTHSTOCKc 26. TheJamesRiverCo.paysanannualdividendof$1.50pershareonitscommonstock. Thisdividendamounthasbeenconstantforthepast15yearsandisexpectedtoremain constant.Giventhis,oneshareofJamesRiverCo.stock: a. isbasicallyworthlessasitoffersnogrowthpotential. b. hasamarketvalueequaltothepresentvalueof$1.50paidoneyearfromtoday. c. isvaluedasifthedividendpaidisaperpetuity. d. isvaluedwithanassumedgrowthrateof3%. e. hasamarketvalueof$15.00. Difficultylevel:EasyVALUATIONOFZEROGROWTHSTOCKe 27. ThecommonstockoftheKenwithCo.paysaconstantannualdividend.Thus,themarketpriceofKenwithstockwill: a. alsoremainconstant. b. increaseovertime. c. decreaseovertime. d. increasewhenthemarketrateofreturnincreases. e. decreasewhenthemarketrateofreturnincreases. Difficultylevel:EasyDIVIDENDYIELDVS.CAPITALGAINSYIELDc 28. TheKosterCo.currentlypaysanannualdividendof$1.00andplansonincreasingthatamountby5%eachyear.TheKeyserCo.currentlypaysanannualdividendof$1.00andplansonincreasingtheirdividendby3%annually.Giventhis,itcanbestatedwithcertaintythatthe_____oftheKosterCo.stockisgreaterthanthe_____oftheKeyserCo.stock. a. marketprice;marketprice b. dividendyield;dividendyield c. rateofcapitalgain;rateofcapitalgain d. totalreturn;totalreturn e. capitalgains;dividendyield Difficultylevel:MediumDIVIDENDGROWTHMODELd 29. Thedividendgrowthmodel: I. assumesthatdividendsincreaseataconstantrateforever. II. canbeusedtocomputeastockpriceatanypointoftime. III. statesthatthemarketpriceofastockisonlyaffectedbytheamountofthedividend. IV. considerscapitalgainsbutignoresthedividendyield. a. Ionly b. IIonly c. IIIandIVonly d. IandIIonly e. I,II,andIIIonly Difficultylevel:MediumDIVIDENDGROWTHMODELb 30. Theunderlyingassumptionofthedividendgrowthmodelisthatastockisworth: a. thesameamounttoeveryinvestorregardlessoftheirdesiredrateofreturn. b. thepresentvalueofthefutureincomewhichthestockgenerates. c. anamountcomputedasthenextannualdividenddividedbythemarketrateofreturn. d. thesameamountasanyotherstockthatpaysthesamecurrentdividendandhasthesamerequiredrateofreturn. e. anamountcomputedasthenextannualdividenddividedbytherequiredrateofreturn. Difficultylevel:MediumDIVIDENDGROWTHMODELc 31. Assumethatyouareusingthedividendgrowthmodeltovaluestocks.Ifyouexpectthemarketrateofreturntoincreaseacrosstheboardonallequitysecurities,thenyoushouldalsoexpectthe: a. marketvaluesofallstockstoincrease,allelseconstant. b. marketvaluesofallstockstoremainconstantasthedividendgrowthwilloffsetthe increaseinthemarketrate. c. marketvaluesofallstockstodecrease,allelseconstant. d. stocksthatdonotpaydividendstodecreaseinpricewhilethedividend-payingstocksmaintainaconstantprice. e. dividendgrowthratestoincreasetooffsetthischange. Difficultylevel:MediumDIFFERENTIALGROWTHc 32. Latcher’sInc.isarelativelynewfirmthatisstillinaperiodofrapiddevelopment.The companyplansonretainingallofitsearningsforthenextsixyears.Sevenyearsfrom now,thecompanyprojectspayinganannualdividendof$.25ashareandthenincreasingthatamountby3%annuallythereafter.Tovaluethisstockasoftoday,youwouldmostlikelydeterminethevalueofthestock_____yearsfromtodaybeforedeterminingtoday’svalue. a. 4 b. 5 c. 6 d. 7 e. 8 Difficultylevel:MediumDIFFERENTIALGROWTHd 33. TheRobertPhillipsCo.currentlypaysnodividend.Thecompanyisanticipating dividendsof$0,$0,$0,$.10,$.20,and$.30overthenext6years,respectively.Afterthat,thecompanyanticipatesincreasingthedividendby4%annually.Thefirststepincomputingthevalueofthisstocktoday,istocomputethevalueofthestockwhenitreachesconstantgrowthinyear: a. 3. b. 4. c. 5. d. 6. e. 7. Difficultylevel:MediumDIFFERENTIALGROWTHb 34. Supernormalgrowthreferstoafirmthatincreasesitsdividendby: a. threeormore%peryear. b. aratewhichismostlikelynotsustainableoveranextendedperiodoftime. c. aconstantrateof2ormore%peryear. d. $.10ormoreperyear. e. anamountinexcessof$.10ayear. Difficultylevel:MediumDIVIDENDYIELDANDCAPITALGAINSe 35. Thetotalrateofreturnearnedonastockiscomprisedofwhichtwoofthefollowing? I. currentyield II. yieldtomaturity III. dividendyield IV. capitalgainsyield a. IandIIonly b. IandIVonly c. IIandIIIonly d. IIandIVonly e. IIIandIVonly Difficultylevel:MediumDIVIDENDYIELDc 36. Thetotalrateofreturnonastockcanbepositiveevenwhenthepriceofthestockdepreciatesbecauseofthe: a. capitalappreciation. b. interestyield. c. dividendyield. d. supernormalgrowth. e. realrateofreturn. Difficultylevel:MediumDIVIDENDYIELDANDCAPITALGAINSc 37. FredFlintlockwantstoearnatotalof10%onhisinvestments.HerecentlypurchasedsharesofABCstockatapriceof$20ashare.Thestockpaysa$1ayeardividend.ThepriceofABCstockneedsto_____ifFredistoachievehis10%rateofreturn. a. remainconstant b. decreaseby5% c. increaseby5% d. increaseby10% e. increaseby15% Difficultylevel:MediumDIVIDENDGROWTHMODELd 38. Whichoneofthefollowingcorrectlydefinesthedividendconstantgrowthmodel? a. P0=D0(R-g) b. D=P0(R-g) c. R=(P0D0)+g d. R=(D1P0)+g e. P0=(D1R)+g Difficultylevel:MediumSHAREHOLDERRIGHTSa 39. Shareholdersgenerallyhavetherightto: I. electthecorporatedirectors. II. selecttheseniormanagementofthefirm. III. electthechiefexecutiveofficer(CEO). IV. electthechiefoperatingofficer(COO). a. Ionly b. IandIIIonly c. IIonly d. IandIIonly e. IIIandIVonly Difficultylevel:MediumCUMULATIVEVOTINGc 40. Jackowns35sharesofstockinBeta,Inc.andwantstoexerciseasmuchcontrolaspossibleoverthecompany.Beta,Inc.hasatotalof100sharesofstockoutstanding.Eachsharereceivesonevote.Presently,thecompanyisvotingtoelecttwonewdirectors.Whichoneofthefollowingstatementsmustbetruegiventhisinformation? a. Ifstraightvotingapplies,Jackisassuredoneseatontheboard. b. Ifstraightvotingapplies,Jackcancontrolbothopenseats. c. Ifcumulativevotingapplies,Jackisassuredoneseatontheboard. d. Ifcumulativevotingapplies,Jackcancontrolbothopenseats. e. Regardlessofthetypeofvotingemployed,Jackdoesnotownenoughsharestocontrolanyoftheseats. Difficultylevel:MediumSTRAIGHTVOTINGa 41. ABCCo.isownedbyagroupofshareholderswhoallvoteindependentlyandwhoallwantpersonalcontroloverthefirm.Ifstraightvotingisutilized,ashareholder: a. musteitherownenoughsharestototallycontroltheelectionsorelsehe/shehasnocontrolwhatsoever. b. willbeabletoelectatleastonedirectoraslongasthereareatleastthreeopenpositionsandtheshareholderownsatleast25%plusoneoftheoutstandingshares. c. mustownatleasttwo-thirdsoftheshares,plusone,toexercisecontrolovertheelections. d. isonlypermittedtoelectonedirector,regardlessofthenumberofsharesowned. e. whoownsmoresharesthananyoneelse,regardlessofthenumberofsharesowned,willcontroltheelections. Difficultylevel:MediumPROXYVOTINGe 42. TheZiloCorp.has1,000shareholdersandispreparingtoelectthreenewboardmembers.Youdonotownenoughsharestocontroltheelectionsbutaredeterminedtooustthecurrentleadership.Themostlikelyresultofthissituationisa: a. negotiatedsettlementwhereyouaregrantedcontroloveroneofthethreeopenpositions. b. legalbattleforcontrolofthefirmbasedonyourdiscontentasanindividualshareholder. c. arbitratedsettlementwherebyyouaregrantedcontroloveroneofthethreeopenpositions. d. totallossofpowerforyousinceyouareaminorityshareholder. e. proxyfightforcontrolofthefirm. Difficultylevel:MediumSHAREHOLDERRIGHTSe 43. Commonstockshareholdersaregenerallygrantedrightswhichincludetherightto: I. shareincompanyprofits. II. voteforcompanydirectors. III. voteonproposedmergers. IV. residualassetsinaliquidation. a. IandIIonly b. IIandIIIonly c. IandIVonly d. I,II,andIVonly e. I,II,III,andIV Difficultylevel:MediumDIVIDENDSe 44. TheScottCo.hasageneraldividendpolicywherebytheypayaconstantannualdividendof$1pershareofcommonstock.Thefirmhas1,000sharesofstockoutstanding.Thecompany: a. mustalwaysshowacurrentliabilityof$1,000fordividendspayable. b. isobligatedtocontinuepaying$1pershareperyear. c. willbedeclaredindefaultandcanfacebankruptcyiftheydonotpay$1peryeartoeachshareholderonatimelybasis. d. hasaliabilitywhichmustbepaidatalaterdateshouldthecompanymisspayinganannualdividendpayment. e. muststilldeclareeachdividendbeforeitbecomesanactualcompanyliability. Difficultylevel:MediumDIVIDENDSb 45. Thedividendspaidbyacorporation: I. toanindividualbecometaxableincomeofthatindividual. II. reducethetaxableincomeofthecorporation. III. aredeclaredbythechieffinancialofficerofthecorporation. IV. toanothercorporationmayormaynotrepresenttaxableincometotherecipient. a. Ionly b. IandIVonly c. IIandIIIonly d. I,II,andIVonly e. I,III,andIVonly Difficultylevel:MediumPREFERREDSTOCKa 46. Theownerofpreferredstock: a. isentitledtoadistributionofincomepriortothecommonshareholders. b. hastherighttovetotheoutcomeofanelectionheldbythecommonshareholders. c. hastherighttodeclarethecompanybankruptwheneverthereareinsufficientfundsto paydividendstothecommonshareholders. d. receivestax-freedividendsiftheyareanindividualandownmorethan20%of theoutstandingpreferredshares. e. hastherighttocollectpaymentonanyunpaiddividendsaslongasthestockis noncumulativepreferred. Difficultylevel:MediumPREFERREDSTOCKb 47. A6%preferredstockpays_____ayearindividendspershare. a. $3 b. $6 c. $12 d. $30 e. $60 Difficultylevel:EasyPREFERREDSTOCKe 48. Whichoneofthefollowingstatementsconcerningpreferredstockiscorrect? a. Unpaidpreferreddividendsarealiabilityofthefirm. b. Preferreddividendsmustbepaidquarterlyprovidedthefirmhasnetincomethatexceedstheamountofthequarterlydividend. c. Preferreddividendsmustbepaidtimelyeachquarterortheunpaiddividendsstartaccruinginterest. d. Allunpaiddividendsonpreferredstock,regardlessofthetypeofpreferred,mustbepaidbeforeanyincomecanbedistributedtocommonshareholders. e. Preferredshareholdersmaybegrantedvotingrightsandseatsontheboardifpreferreddividendpaymentsremainunpaid. Difficultylevel:MediumPREFERREDSTOCKe 49. Inaliquidation,eachshareof5%preferredstockisgenerallyentitledtoaliquidationpaymentof_____aslongastherearesufficientfundsavailable. a. $1 b. $5 c. $10 d. $50 e. $100 Difficultylevel:MediumCOMMONSTOCKVALUESc 50. Thevalueofcommonstocktodaydependson a. theexpectedfutureholdingperiodandthediscountrate. b. theexpectedfuturedividendsandthecapitalgains. c. theexpectedfuturedividends,capitalgainsandthediscountrate. d. theexpectedfutureholdingperiodandcapitalgains. e. Noneoftheabove. Difficultylevel:MediumPRIMARYMARKETd 51. Whichoneofthefollowingtransactionsoccursintheprimarymarket? a. thesaleofABCstockbyFredJonestoMarySmith b. thetax-freegiftofDEFstocktoHeatherbyJennifer c. therepurchaseofGHIstockfromTimbyGHI d. theinitialsaleofJKLstockbyJKLtoJamie e. thetransferofMNOstockfromTomtohisson,Jon Difficultylevel:MediumDEALERSANDBROKERSd 52. Whichoneofthefollowingstatementsconcerningdealersandbrokersiscorrect? a. Adealerinmarketsecuritiesarrangessalesbetweenbuyersandsellersforafee. b. Adealerinmarketsecuritiespaystheaskedpricewhenpurchasingsecurities. c. Abrokerinmarketsecuritiesearnsincomeintheformofabid-askspread. d. Abrokerdoesnottakeownershipofthesecuritiesbeingtraded. e. Abrokerdealssolelyintheprimarymarket. Difficultylevel:EasyPERPETUITYFORMULAd 53. TheformulaPo a. thepresentvalueofastreamofzerogrowthdividendsinperpetuity. b. thevalueofanogrowthdividendstream. c. alowervaluethanifagrowthelementwasincluded. d. Alloftheabove. e. Noneoftheabove. Difficultylevel:EasySPECIALIST’SPOSTb 54. ThepostisastationarypositionontheflooroftheNewYorkStockExchangewherea_____isassignedtowork. a. floortrader b. specialist c. dealer d. floorbroker e. commissionbroker Difficultylevel:MediumSTOCKMARKETREPORTINGd 55. Theclosingpriceofastockisquotedat22.87,withaP/Eof26andanetchangeof 1.42.Basedonthisinformation,whichoneofthefollowingstatementsiscorrect? a. Theclosingpriceonthepreviousdaywas$1.42higherthantoday’sclosingprice. b. Adealerwillbuythestockat$22.87andsellitat$26ashare. c. Thestockincreasedinvaluebetweenyesterday’scloseandtoday’scloseby$.0142. d. Theearningspershareareequalto1/26thof$22.87. e. Theearningspersharehaveincreasedby$1.42thisyear. Difficultylevel:MediumSTOCKQUOTEb 56. Astocklistingcontainsthefollowinginformation:P/E17.5,closingprice33.10, dividend.80,YTD%chg3.4,andanetchgof-.50.Whichofthefollowingstatements arecorrectgiventhisinformation? I. Thestockpricehasincreasedby3.4%duringthecurrentyear. II. Theclosingpriceontheprevioustradingdaywas$32.60. III. Theearningspershareareapproximately$1.89. IV. Thecurrentyieldis17.5%. a. IandIIonly b. IandIIIonly c. IIandIIIonly d. IIIandIVonly e. I,III,andIVonly Difficultylevel:MediumDISCOUNTRATEb 57. Thediscountrateinequityvaluationiscomposedentirelyof a. thedividendspaidandthecapitalgainsyield. b. thedividendyieldandthegrowthrate. c. thedividendspaidandthegrowthrate. d. thecapitalgainsearnedandthegrowthrate. e. thecapitalgainsearnedandthedividendspaid. Difficultylevel:MediumNPVGO b 58. Thenetpresentvalueofagrowthopportunity,NPVGO,canbedefinedas a. thepresentvalueofaninvestmentinonenewproject. b. thesteadygrowthindividendsfromcontinualre-investmentwithpositiveNPV. c. continualreinvestmentofearningswhenr<g. d. asingleperiodinvestmentwhenr>g. e. Noneoftheabove. Difficultylevel:MediumIII. PROBLEMSSTOCKVALUE–CONSTANTGROWTHe 59. Angelina’smadetwoannouncementsconcerningtheircommonstocktoday.First,the companyannouncedthattheirnextannualdividendhasbeensetat$2.16ashare. Secondly,thecompanyannouncedthatallfuturedividendswillincreaseby4% annually.Whatisthemaximumamountyoushouldpaytopurchaseashareof Angelina’sstockifyourgoalistoearna10%rateofreturn? a. $21.60 b. $22.46 c. $27.44 d. $34.62 e. $36.00 Difficultylevel:EasySTOCKVALUE–CONSTANTGROWTHd 60. Howmuchareyouwillingtopayforoneshareofstockifthecompanyjustpaidan $.80annualdividend,thedividendsincreaseby4%annuallyandyourequirean 8%rateofreturn? a. $19.23 b. $20.00 c. $20.40 d. $20.80 e. $21.63 Difficultylevel:EasySTOCKVALUE–CONSTANTGROWTHd 61. LeeHongImportspaida$1.00pershareannualdividendlastweek.Dividendsare expectedtoincreaseby5%annually.Whatisoneshareofthisstockworthto youtodayiftheappropriatediscountrateis14%? a. $7.14 b. $7.50 c. $11.11 d. $11.67 e. $12.25 Difficultylevel:EasySTOCKVALUE-CONSTANTGROWTHc 62. MajesticHomesstocktraditionallyprovidesan8%rateofreturn.Thecompany justpaida$2ayeardividendwhichisexpectedtoincreaseby5%peryear.If youareplanningonbuying1,000sharesofthisstocknextyear,howmuchshouldyou expecttopaypershareifthemarketrateofreturnforthistypeofsecurityis9% atthetimeofyourpurchase? a. $48.60 b. $52.50 c. $55.13 d. $57.89 e. $70.00 Difficultylevel:EasySTOCKVALUE-CONSTANTGROWTHc 63. Leslie’sUniqueClothingStoresoffersacommonstockthatpaysanannualdividend of$2.00ashare.Thecompanyhaspromisedtomaintainaconstantdividend.How muchareyouwillingtopayforoneshareofthisstockifyouwanttoearn12% returnonyourequityinvestments? a. $10.00 b. $13.33 c. $16.67 d. $18.88 e. $20.00 Difficultylevel:EasySTOCKVALUE–DIFFERENTIALGROWTHb 64. Martin’sYachtshaspaidannualdividendsof$1.40,$1.75,and$2.00ashareoverthe pastthreeyears,respectively.Thecompanynowpredictsthatitwillmaintaina constantdividendsinceitsbusinesshasleveledoffandsalesareexpectedtoremain relativelyconstant.Giventhelackoffuturegrowth,youwillonlybuythisstockifyou canearnatleasta15%rateofreturn.Whatisthemaximumamountyouare willingtopaytobuyoneshareofthisstocktoday? a. $10.00 b. $13.33 c. $16.67 d. $18.88 e. $20.00 Difficultylevel:MediumREQUIREDRETURNc 65. ThecommonstockofEddie’sEngines,Inc.sellsfor$25.71ashare.Thestockis expectedtopay$1.80persharenextmonthwhentheannualdividendisdistributed. Eddie’shasestablishedapatternofincreasingtheirdividendsby4%annually andexpectstocontinuedoingso.Whatisthemarketrateofreturnonthisstock? a. 7% b. 9% c. 11% d. 13% e. 15% Difficultylevel:MediumREQUIREDRETURNa 66. ThecurrentyieldonAlpha’scommonstockis4.8%.Thecompanyjustpaida $2.10dividend.Therumoristhatthedividendwillbe$2.205nextyear.Thedividend growthrateisexpectedtoremainconstantatthecurrentlevel.Whatistherequired rateofreturnonAlpha’sstock? a. 10.04% b. 16.07% c. 21.88% d. 43.75% e. 45.94% Difficultylevel:MediumREQUIREDRETURNe 67. Martha’sVineyardrecentlypaida$3.60annualdividendontheircommonstock.This dividendincreasesatanaveragerateof3.5%peryear.Thestockiscurrently sellingfor$62.10ashare.Whatisthemarketrateofreturn? a. 2.5% b. 3.5% c. 5.5% d. 6.0% e. 9.5% Difficultylevel:MediumREQUIREDRETURNd 68. Bet’RBiltBikesjustannouncedthattheirannualdividendforthiscomingyearwillbe $2.42ashareandthatallfuturedividendsareexpectedtoincreaseby2.5% annually.Whatisthemarketrateofreturnifthisstockiscurrentlysellingfor$22a share? a. 9.5% b. 11.0% c. 12.5% d. 13.5% e. 15.0% Difficultylevel:MediumDIVIDENDYIELDVS.CAPITALGAINSYIELDb 69. SharesofcommonstockoftheSamsonCo.offeranexpectedtotalreturnof12%.Thedividendisincreasingataconstant8%peryear.Thedividendyieldmustbe: a. -4%. b. 4%. c. 8%. d. 12%. e. 20%. Difficultylevel:MediumCAPITALGAINc 70. ThecommonstockofGradyCo.returnedan11.25%rateofreturnlastyear.Thedividendamountwas$.70asharewhichequatedtoadividendyieldof1.5%.Whatwastherateofpriceappreciationonthestock? a. 1.50% b. 8.00% c. 9.75% d. 11.25% e. 12.75% Difficultylevel:EasyDIVIDENDAMOUNTb 71. WeisbroandSonscommonstocksellsfor$21ashareandpaysanannualdividendthatincreasesby5%annually.Themarketrateofreturnonthisstockis9%.WhatistheamountofthelastdividendpaidbyWeisbroandSons? a. $.77 b. $.80 c. $.84 d. $.87 e. $.88 Difficultylevel:MediumDIVIDENDAMOUNTd 72. ThecommonstockofEnergizer’spaysanannualdividendthatisexpectedtoincreaseby10%annually.Thestockcommandsamarketrateofreturnof12%andsellsfor$60.50ashare.WhatistheexpectedamountofthenextdividendtobepaidonEnergizer’scommonstock? a. $.90 b. $1.00 c. $1.10 d. $1.21 e. $1.33 Difficultylevel:MediumDIVIDENDAMOUNTd 73. TheReadingCo.hasadoptedapolicyofincreasingtheannualdividendontheircommonstockataconstantrateof3%annually.Thelastdividendtheypaidwas$0.90ashare.Whatwilltheirdividendbeinsixyears? a. $.90 b. $.93 c. $1.04 d. $1.07 e. $1.11 Difficultylevel:MediumCONSTANTDIVIDENDe 74. Astockpaysaconstantannualdividendandsellsfor$31.11ashare.Iftherateofreturnonthisstockis9%,whatisthedividendamount? a. $1.40 b. $1.80 c. $2.20 d. $2.40 e. $2.80 Difficultylevel:MediumCONSTANTDIVIDENDb 75. YouhavedecidedthatyouwouldliketoownsomesharesofGHCorp.butneedanexpected12%rateofreturntocompensatefortheperceivedriskofsuchownership.Wha