CH08TBV7 - CHAPTER 8 Stock Valuation I. DEFINITIONS GROWING...

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CHAPTER 8 Stock Valuation I. DEFINITIONS GROWING PERPETUITY a 1. An asset characterized by cash flows that increase at a constant rate forever is called a: a. growing perpetuity. b. growing annuity. c. common annuity. d. perpetuity due. e. preferred stock. DIVIDEND GROWTH MODEL b 2. The stock valuation model that determines the current stock price by dividing the next annual dividend amount by the excess of the discount rate less the dividend growth rate is called the _____ model. a. zero growth b. dividend growth c. capital pricing d. earnings capitalization e. discounted dividend DIVIDEND YIELD c 3. Next year’s annual dividend divided by the current stock price is called the: a. yield to maturity. b. total yield. c. dividend yield. d. capital gains yield. e. earnings yield. CAPITAL GAINS YIELD d 4. The rate at which a stock’s price is expected to appreciate (or depreciate) is called the _____ yield. a. current b. total c. dividend d. capital gains e. earnings PREFERRED STOCK d 5. A form of equity which receives preferential treatment in the payment of dividends is called _____ stock. a. dual class b. cumulative c. deferred d. preferred e. common
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CHAPTER 8 PREFERRED STOCK e 6. A _____ is a form of equity security that has a stated liquidating value. a. bond b. debenture c. proxy d. common stock e. preferred stock COMMON STOCK e 7. A form of equity which receives no preferential treatment in either the payment of dividends or in bankruptcy distributions is called _____ stock. a. dual class b. cumulative c. deferred d. preferred e. common CUMULATIVE VOTING b 8. The voting procedure whereby shareholders may cast all of their votes for one member of the board is called _____ voting. a. democratic b. cumulative c. straight d. deferred e. proxy STRAIGHT VOTING c 9. The voting procedure where you must own 50 percent plus one of the outstanding shares of stock to guarantee that you will win a seat on the board of directors is called _____ voting. a. democratic b. cumulative c. straight d. deferred e. proxy PROXY VOTING e 10. The voting procedure where a shareholder grants authority to another individual to vote his/her shares is called _____ voting. a. democratic b. cumulative c. straight d. deferred e. proxy
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CHAPTER 8 PREEMPTIVE RIGHTS b 11. Preemptive rights refer to the right of shareholders to: a. share proportionately in dividends paid. b. share proportionately in any new stock issues sold. c. share proportionately in liquidated assets. d. vote at annual shareholder meetings. e. override the votes of other shareholders. DIVIDENDS c 12. Payments made by a corporation to its shareholders, in the form of either cash, stock or payments in kind, are called: a. retained earnings. b.
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CH08TBV7 - CHAPTER 8 Stock Valuation I. DEFINITIONS GROWING...

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