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Unformatted text preview: ECONOMICS 389 MIDTERM 2 Sample for Spring, 2010 Answer all questions. For full credit you must show all your work. Part I. Multiple Choice. 1. Which of the following statements is correct about a stock currently selling for $50 per share that has a 16% expected return and a 10% expected capital appreciation? a. Its expected dividend exceeds that actual dividend. b. Its expected return will exceed the actual return. c. It is expected to pay $3 in annual dividends. d. It is expected to pay $8 in annual dividends. 2. The price of a stock a year ago was $20 and it has recently paid a dividend of $1.50. If this stock sells today for $19.50, then its rate of return over the past year has been: a. 5.00% b. 10.00% c. 12.50% d. -0.025% 3. Which of the following statements is correct? a. The New York Stock Exchange (NYSE) is an example of an auction market. b. The dividend discount model should not be used to value stocks in which the dividend does not grow....
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This note was uploaded on 04/13/2010 for the course ECO 389 taught by Professor Chen,j during the Spring '08 term at SUNY Stony Brook.
- Spring '08