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Exam 2 Solutions

# Exam 2 Solutions - Test 2(Chapters 7 and 8 FIN 3250 Section...

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Test 2 (Chapters 7 and 8) March 10, 2006 FIN 3250 Section 1 MWF 1:10-2:00 Spring 2006 Closed book, notecard allowed Calculator required 50 minutes allowed 100 points total For each multiple choice question, circle the choice that best answers the question. Circle only one answer for each question To get credit for problems , you must show your work. This means showing your calculations or showing everything that you entered in your calculator. Name ______________ _______

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Multiple Choice Questions 1. (4 points) If ABC Corporation has 10 million shares outstanding and the price of ABC Corporation stock is \$10 per share, what is all of the equity of ABC Corporation worth? a. \$1 billion b. \$100 million c. \$10 million d. \$1 million 2. (4 points) The next dividend payment by GUM (to be paid one year from today) is \$3. If dividends are expected to maintain a 5% growth rate, and the stock currently sells for \$30 per share, what is the required return (r)? a.
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Exam 2 Solutions - Test 2(Chapters 7 and 8 FIN 3250 Section...

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