公司理财期末789选择题

1.Whatisthenamegiventothemodelthatcomputesthepresentvalueofastockbydividingnext

year'sannualdividendamountbythedifferencebetweenthediscountrateandtherateofchange

intheannualdividendamount?

A.Stockpricingmodel

B.Equitypricingmodel

C.Capitalgainmodel

D・Dividendgrowthmodel

E.Presentvaluemodel

Refertosection7.1.

Bloom's:Knowledge

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

2.Thedividendyieldisdefinedas:

A.thecurrentannualcashdividenddividedbythecurrentmarketpricepershare.

B.thecurrentannualcashdividenddividedbythecurrentbookvaluepershare.

C・nextyear'sexpectedcashdividenddividedbythecurrentmarketpricepershare.

D.nextyear'sexpectedcashdividenddividedbythecurrentbookvaluepershare.

E.nextyear'sexpectedcashdividenddividedbynextyear'sexpectedmarketpricepershare.

Refertosection7.1.

Bloomfs:Knowledge

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendyield

3.Thecapitalgainsyieldequalswhichoneofthefollowing?

A.Totalyield

B.Currentdiscountrate

C.Marketrateofreturn

D.Dividendyield

E,Dividendgrowthrate

Refertosection7.1.

Bloom's:Knowledge

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Capitalgainsyield

4.Whichoneofthefollowingtypesofsecuritieshasnopriorityinabankruptcyproceeding?

A.Convertiblebond

B.Seniordebt

C.Commonstock

D.Preferredstock

EStraightbond

24.Whichoneofthefollowingwillincreasethecurrentvalueofastock?

A.Decreaseinthedividendgrowthrate

B.Increaseintherequiredreturn

C.Increaseinthemarketrateofreturn

D.Decreaseintheexpecteddividendfornextyear

E・Increaseinthecapitalgainsyield

Reviewsection7.1.

Bloom's:Comprehension

Difficult)'：Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Stockvaluation

25.Thepriceofastockatyear4canbeexpressedas:

A.DO/(R+G4).

5

B.Dox(l+R).

C.D,x(1+R)5.

D.DJgg).

KDVCR-g).

Refertosection7.1.

Bloom's:Knowledge

Difficulty^:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

26.Delfino'sexpectstopayanannualdividendof$1.50persharenextyear.Whatisthe

anticipateddividendforyear5ifthefirmincreasesitsdividendby2percentannually?

A.$1.50x(1.02)'

B.$1.50x(1.02)2

C.$1.50x(1.02)3

❷$1.50x(1.02)4

E.$1.50x(1.02)5

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowth

27.Therequiredreturnonastockisequaltowhichoneofthefollowingifthedividendonthe

stockdecreasesby1percentperyear?

A.(P，D])-g

B.(Di/PoXg

C・Dividendyield+capitalgainsyield

D.Dividendyield-capitalgainsyield

E.Dividendyieldxcapitalgainsyield

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Requiredreturn

28.DonutsDelitejustpaidanannualdividendof$1.10ashare.Thefirmexpectstoincreasethis

dividendby8percentperyearthefollowing3yearsandthendecreasethedividendgrowthto2

percentannuallythereafter.Whichoneofthefollowingisthecorrectcomputationofthedividend

foryear7?

A.($1.10)(1.08x3)(1.02x4)

B.($1.10)(1.08x3)(1.02x3)

&($1.10)(1.08)3(1.02)4

D.($1.10)(1.08)3(1.02)3

E.($1.10)(1.08)3(1.02)2

Refertosection7.1.

Bloom飞:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowth

29.Aardvark,Inc.paysaconstantannualdividend.AttheendoftradingonWednesday,theprice

ofitsstockwas$28.Attheendoftradingonthefollowingday,thestockpricewas$27.Asa

resultofthedeclineinthestock'sprice,thedividendyieldwhilethecapitalgainsyield

A.remainedconstant;remainedconstant

B,increased;remainedconstant

C.increased;increased

D.decreased;remainedconstant

E.decreased;decreased

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendandcapitalgainyield

30.Whichoneofthefollowingmustequalzeroifafirmpaysaconstantannualdividend?

A.Dividendyield

B,Capitalgainsyield

C.Totalreturn

D.Marketvaluepershare

E.Bookvaluepershare

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Capitalgainsyield

31.Thedividendgrowthmodelcanbeusedtovaluethestockoffirmswhichpaywhichtypeof

dividends?

I.constantannualdividend

ILannualdividendwithaconstantincreasingrateofgrowth

III.annualdividendwithaconstantdecreasingrateofgrowth

IV.zerodividend

A.Ionly

B.IIonly

C.IIandIIIonly

D.I,II,andIIIonly

E.I,II,III,andIV

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

32.Kateownsastockwithamarketpriceof$31pershare.Thisstockpaysaconstantannual

dividendof$0.60pershare.Ifthepriceofthestocksuddenlyincreasesto$36ashare,youwould

expectthe:

I.dividendyieldtoincrease.

ILdividendyieldtodecrease.

III.capitalgainsyieldtoincrease.

IV.capitalgainsyieldtodecrease.

A.Ionly

B.IIonly

C.Illonly

D.IandIIIonly

E.IIandIVonly

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendandcapitalgainyield

33.Computingthepresentvalueofagrowingperpetuityismostsimilartocomputingthecurrent

valueofwhichoneofthefollowing?

A.Non-dividend-payingstock

B.Stockwithaconstantdividend

C.Stockwithirregulardividends

D・Stockwithaconstantgrowthdividend

E.Stockwithgrowingdividendsforalimitedperiodoftime

Refertosection7.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Growingperpetuity

34.JensenShippinghasfouropenseatsonitsboardofdirectors.Howmanyshareswilla

shareholderneedtocontroltoensurethathisorhercandidateiselectedtotheboardgiventhefact

thatthefirmusesstraightvoting?Assumeoneshareequalsonevote.

A.20percentofthesharesplusonevote

B.25percentofthesharesplusonevote

C.1/3ofthesharesplusonevote

D.50percentofthesharesplusonevote

E.51percentofthesharesplusonevote

51.KellerMetalscommonstockissellingfor$36ashareandhasadividendyieldof3.2percent.

Whatisthedividendamount?

A.$0.32

B.S1.15

C.$3.49

D.$11.25

E.$11.52

Dividend=0.032x$36=$1.15

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7J

Topic:Dividendamount

52.TheGlassCeilingpaidanannualdividendof$2.20persharelastyear.Managementjust

announcedthatfuturedividendswillincreaseby2.8percentannually.Whatistheamountofthe

expecteddividendinyear5?

A.$2.39

B.$2,41

C.$2.46

D.$2.53

E.$2.58

5

D5=$2.20x(1.028)=$2.53

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendamount

53.ThePancakeHousepaysaconstantannualdividendof$1.25pershare.Howmuchareyou

willingtopayforoneshareifyourequirea15percentrateofreturn?

A.$7.86

B.$8.33

C.$10.87

D.$11.04

E.$11.38

P=$1.25/0.15=$8.33

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Constantdividend

54.ShorelineFoodspaysaconstantannualdividendof$1.60ashareandcurrentlysellsfor

$28.50ashare.Whatistherateofreturn?

A.4.56percent

B.5.39percent

C.5.61percent

D.6.63percent

E.6.91percent

R=$1.60/$28.50=5.61percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Constantdividend

55.ThecommonstockofGreenGardenFlowersissellingfor$24ashare.Thecompanypaysa

constantannualdividendandhasatotalreturnof3.8percent.Whatistheamountofthe

dividend?

A.$0.38

B.$0.76

C.$0,91

D.$1.38

E.$1.54

D=0.038x$24=$0.91

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Totalreturn

56.HealthyFoodsjustpaiditsannualdividendof$1.45ashare.Thefirmrecentlyannouncedthat

allfuturedividendswillbeincreasedby2.8percentannually.Whatisoneshareofthisstock

worthtoyouifyourequirea14percentrateofreturn?

A.$12.56

B.$12.95

C$13.31

D.$13.68

E.$14.07

P0=($1.45x1.028)/(0.14-0.028)=$13.31

AACSB:Analytic

Bloomrs:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

57.Plastics,Inc.willpayanannualdividendof$1.85nextyear.Thecompanyjustannouncedthat

futuredividendswillbeincreasingby2.25percentannually.Howmuchareyouwillingtopayfor

oneshareofthisstockifyourequirea16percentreturn?

A.$13.45

B.$13.61

C.$13.76

D.$14.02

E.$14.45

Po=$1.85/(O.l6-0.0225)=$13.45

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

58.ThePrintingCompanystockissellingfor$32.60asharebasedona14percentrateofreturn.

Whatistheamountofthenextannualdividendifthedividendsareincreasingby2.5percent

annually?

A.$3.48

B.$3,52

C.$3,57

D.$3.66

E.$3.75

$32.60x(0.14-0.025)=$3.75

AACSB:Analytic

Bloomrs:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

59.ThecommonstockofMid-TowneMoversissellingfor$33ashareandhasa9percentrateof

return.Thegrowthrateofthedividendsis1percentannually.Whatistheamountofthenext

annualdividend?

A.$2,58

B.$2,61

C$2.64

D.$2,67

E.$2.70

$33x(0.09-0.01)=$2.64

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

60.Delphin'sMarinaisexpectedtopayanannualdividendof$0.58nextyear.Thestockisselling

for$8.53ashareandhasatotalreturnof12percent.Whatisthedividendgrowthrate?

A.3.82percent

B.4.03percent

C.4.28percent

D.5.20percent

E.5.49percent

g=0.12-($0.58/$8.53)=5.20percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

61.KlausToysjustpaiditsannualdividendof$1.40.Therequiredreturnis16percentandthe

dividendgrowthrateis2percent.Whatistheexpectedvalueofthisstockfiveyearsfromnow?

A.$11.04

B.$11.26

C.$11.67

D.$12.41

E.$12.58

6

P5=[$1.40x(l+0.02)]/(0.16-0.02)=$11.26

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

62.Thismorning,youpurchasedastockthatwillpayanannualdividendof$1.90persharenext

year.Yourequirea12percentrateofreturnandtheannualdividendincreasesat3.5percent

annually.Whatwillyourcapitalgainbeonthisstockifyousellitthreeyearsfromnow?

A.$2,43

B.$2.51

C.$2.63

D.$2.87

E.$2.92

P()=$1.90/(0.12-0.035)=$22.35

3

P3=[$1.90x(1.035)]/(0.l2-0.035)=$24.78

Capitalgain=$24.78-$22.35=$2.43

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Capitalgain

63.BlackwellInkislosingsignificantmarketshareandthusitsmanagershavedecidedto

decreasethefirm'sannualdividend.Thelastannualdividendwas$0.90asharebutallfuture

dividendswillbedecreasedby5percentannually.Whatisashareofthisstockworthtodayata

requiredreturnof15percent?

A.$4,07

B.$4.28

C.$4.49

D.$4,72

E$4.95

Po=($0.90x(1-0.05)/[0.15-(-0.05]=$4.28

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

64.LameyHeadstonesincreasesitsannualdividendby1.5percentannually.Thestocksellsfor

$28,40ashareatarequiredreturnof14percent.Whatistheamountofthelastdividendthis

companypaid?

A.$3,50

B.$3.55

C.$3.60

D.$3.65

E.$3.70

$28.40=(Dox1.015)/(0.14-0.015);Do=$3.50

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

65.ThecommonstockofTastyTreatsisvaluedat$10.80ashare.Thecompanyincreasesits

dividendby8percentannuallyandexpectsitsnextdividendtobe$0.20pershare.Whatisthe

totalrateofreturnonthisstock?

A.8.64percent

B.9.12percent

C.9.40percent

D.9.85percent

E.10.64percent

R=($0.20/$10.80)+0.08=9.85percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Totalreturn

66.RiverRock,Inc.justpaidanannualdividendof$2.80.Thecompanyhasincreasedits

dividendby2.5percentayearforthepasttenyearsandexpectstocontinuedoingso.Whatwilla

shareofthisstockbeworthsixyearsfromnowiftherequiredreturnis16percent?

A.$23.60

B.$24,65

C.$25.08

D.$25,50

E.$26.90

7

P6=($2.80x1.025)/(0.16-0.025)=$24.65

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendgrowthmodel

67.TheCartWheelplanstopayanannualdividendof$1.20persharenextyear,$1.00pershare

ayearforthefollowingtwoyears,andthenceasepayingdividendsaltogether.Howmuchisone

shareofthisstockworthtoyoutodayifyourequirea17percentrateofreturn?

A.$2.38

B.$2,43

C.$2,56

D.$2,60

E.$2.64

23

Po=($1.20/1.17')+($1/1.17)+($1/1.17)=$2.38

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulardividends

68.AtlasHomeSupplyhaspaidaconstantannualdividendof$2.40ashareforthepast15years.

Yesterday,thefirmannouncedthedividendwillincreasenextyearby10percentandwillstayat

thelevelthroughyearthree,afterwhichtimethedividendswillincreaseby2percentannually.

Therequiredreturnonthisstockis12percent.Whatisthecurrentvaluepershare?

A.$25.51

B.$26.08

C.$24,57

D.$26.02

E.$26.84

P3=($2.40xl.lOx1.02)/(0.12-0.02)=$26,928

P()={($2.40x1.10)/1.12}+{($2.40x1.1)/1.122}+{[($2.40x1.1)+$26.928]/L123}=$25.51

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulargrowth

69.AutoTransmissionsisexpectedtopayannualdividendsof$1.90and$2.10overthenexttwo

years,respectively.Afterthat,thecompanyexpectstopayaconstantdividendof$2.30ashare.

Whatisthevalueofthisstockatarequiredreturnof15percent?

A.$13.67

B.$14.21

C.$14,83

D.$15.08

E.$15.60

P2=($2.30/0.15)=$15.33

2

Po=[$1.90/1.15]+[($2.10+$15.33)/1.151=$14.83

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulardividends

70.GeneralImportersannouncedtodaythatitsnextannualdividendwillbe$2.60pershare.After

thatdividendispaid,thecompanyexpectstoencountersomefinancialdifficultiesandisgoingto

suspenddividendsfor5years.Followingthesuspensionperiod,thecompanyexpectstopaya

constantannualdividendof$1.30pershare.Whatisthecurrentvalueofthisstockiftherequired

returnis18percent?

A.$3.01

B.$3.55

C.$3.89

D.$4.27

E.$4.88

P6=$1.30/0.18=$7.22

6

Po=($2.60/1.18')+($7.22/1.18)=$4.88

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulardividends

71.BusinessServices,Inc.isexpectedtopayitsfirstannualdividendof$0.80persharethree

yearsfromnow.Startinginyearsix,thecompanyisexpectedtostartincreasingthedividendby2

percentperyear.Whatisthevalueofthisstocktodayatarequiredreturnof12percent?

A.$6,16

B.$6.47

C.$6.63

D.$7.22

E.$7.47

P5=($0.80x1.02)/(0.12-0.02)=$8.16

345

Po=[$0.80/1.12]+[$0.80/1.12]+[($0.80+$8.16)/1.12]=$6.16

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulardividends

74.Afirmexpectstoincreaseitsannualdividendby20percentperyearforthenexttwoyears

andby15percentperyearforthefollowingtwoyears.Afterthat,thecompanyplanstopaya

constantannualdividendof$3ashare.Thelastdividendpaidwas$1.00ashare.Whatisthe

currentvalueofthisstockiftherequiredrateofreturnis12percent?

A.$17.71

B.$18.97

C.$20,50

D.$21.08

E.$21.69

2223224

Po=[(1x1.2)/1.12]+[(1x1.2)/1.12]+[(1x1.2x1.15)/1.12]+[(1x1.2x1.15)/1.12]+

[($3/0.12)/1.124=$20.50

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulardividends

75.TheBorderCrossingjustpaidanannualdividendof$4.20pershareandisexpectedtopay

annualdividendsof$4.40and$4.50persharethenexttwoyears,respectively.Afterthat,thefirm

expectstomaintainaconstantdividendgrowthrateof2percentperyear.Whatisthevalueofthis

stocktodayiftherequiredreturnis14percent?

A.$30.04

B.$32.18

C.$33.33

D.$35.80

E.$36.75

P2=($4.50xL02)/(0.14-0.02)=$38.25

Po=l$4.40/1.14J+[($4.50+$38.25)/1.142=$36.75

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Irregulardividends

76.Astockhasamarketpriceof$46.10andpaysa$2.40annualdividend.Whatisthedividend

yield?

A.4.13percent

B.4.84percent

C.5.21percent

D.5.52percent

E.5.78percent

Dividendyield=$2.40/$46.10=5.21percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendyield

77.TherequiredreturnonMountainMeadowstockis14percentandthedividendgrowthrateis

3.5percent.Thestockiscurrentlysellingfor$11.80ashare.Whatisthedividendyield?

A.7.50percent

B.8.00percent

C.9.75percent

D.10.50percent

E.12.50percent

Dividendyield=0.14-0.035=10.5percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendyield

78.Forthepastsixyears,thepriceofSlateRockstockhasbeenincreasingatarateof8.6percent

ayear.Currently,thestockispricedat$47ashareandhasarequiredreturnof14percent.What

isthedividendyield?

A.1.20percent

B.2.87percent

C.3.39percent

D.4.28percent

E.5.40percent

Dividendyield=0.14-0.086=5.4percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendyield

79.Astockhaspaiddividendsof$1.80,$1.85,$2.00,$2.20,and$2.25overthepastfiveyears,

respectively.Whatistheaveragecapitalgainsyield?

A.2.80percent

B.3.24percent

C.4.45percent

D.5.34percent

E.5.79percent

$1.85-$1.80$2-$l85$2.20-$2$2.25-$2.20

Capitalgamyield=——立幽------"至----------------222------=5"9percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Dividendyield

80.TheToyBoxpaysanannualdividendof$2.40pershareandsellsfor$46.60asharebasedon

amarketrateofreturnof15percent.Whatisthecapitalgainsyield?

A.7.35percent

B.7.78percent

C.9.23percent

D.9.85percent

E.10.11percent

Capitalgainsyield=0.15-($2.40/$46.60)=9.85percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Capitalgainsyield

81.Investorsreceiveatotalreturnof13.7percentonthecommonstockofDexterInternational.

Thestockissellingfor$41,68ashare.Whatisthedividendgrowthrateifthecompanyplansto

payanannualdividendof$2.10asharenextyear?

A.7.42percent

B>8.66percent

C.10.75percent

D.11.60percent

E.13.70percent

Capitalgainsyield=0.137-($2.10/$41.68)=8.66percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Capitalgainsyield

82.WesternBeefstockisvaluedat$62,10ashare.Thecompanypaysaconstantannualdividend

of$4.40pershare.Whatisthetotalreturnonthisstock?

A.6.62percent

B.6.81percent

C.7.09percent

D.7.49percent

E.7.82percent

R=($4.40/$62.10)+0=7.09percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Basic

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Totalreturn

83.Lastyear,whenthestockofAlphaMineralswassellingfor$55asharethedividendyieldwas

3.2percent.Today,thestockissellingfor$41ashare.Whatisthetotalreturnonthisstockifthe

companymaintainsaconstantdividendgrowthrateof2.5percent?

A.6.13percent

B.6.58percent

C.6.90percent

D.7.47percent

E.7.40percent

Do=0.032x$55=$1.76(Note:$55isP.b)

Totalreturn=[($1.76x1.025)/$41]+0.025=6.90percent

AACSB:Analytic

Bloom's:Analysis

Difficulty:Intermediate

LearningObjective:07-01Assesshowstockpricesdependonfuturedividendsanddividend

growth.

Section:7.1

Topic:Totalreturn

¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥¥

1.Thenetpresentvalueofaninvestmentrepresentsthedifferencebetweentheinvestment's:

A.cashinflowsandoutflows.

B.costanditsnetprofit.

C,costanditsmarketvalue.

D.cashflowsanditsprofits.

E.assetsandliabilities.

Refertosection8.1.

Bloom's:Knowledge

Difficulty:Basic

LearningObjective:08-04Evaluateproposedinvestmentsbyusingthenetpresentvaluecriterion.

Section:8.1

Topic:Netpresentvalue

2.Discountedcashflowvaluationistheprocessofdiscountinganinvestment's:

A.assets.

B.futureprofits.

C.liabilities.

D.costs.

E,futurecashflows.

Refertosection8.1.

Bloom's:Knowledge

Difficulty:Basic

LearningObjective:08-04Evaluateproposedinvestmentsbyusingthenetpresentvaluecriterion.

Section:8.1

Topic:Discountedcashflowvaluation

10.Whichoneofthefollowingindicatesthataprojectisexpectedtocreatevalueforitsowners?

A.Profitabilityindexlessthan1.0

B.Paybackperiodgreaterthantherequirement

C,Positivenetpresentvalue

D.Positiveaverageaccountingrateofreturn

E.Internalrateofreturnthatislessthantherequirement

Refertosection8.1.

Bloom's:Comprehension

Difficulty:Basic

LearningObjective:08-04Evaluateproposedinvestmentshyusingthenetpresentvaluecriterion.

Section:8.1

Topic:Netpresentvalue

11.Thenetpresentvalue:

A,decreasesastherequiredrateofreturnincreases.

B.isequaltotheinitialinvestmentwhentheinternalrateofreturnisequaltotherequiredreturn.

C.methodofanalysiscannotbeappliedtomutuallyexclusiveprojects.

D.isdirectlyrelatedtothediscountrate.

E.isunaffectedbythetimingofaninvestment'scashflows.

Refertosection8.1.

Bloom's:Comprehension

Difficulty:Intermediate

LearningObjective:08-04Evaluateproposedinvestmentsbyusingthenetpresentvaluecriterion.

Section:8.1

Topic:Netpresentvalue

12.Whichoneofthefollowingisgenerallyconsideredtobethebestformofanalysisifyouhave

toselectasinglemethodtoanalyzeavarietyofinvestmen