practice10-22

# practice10-22 - Practice Questions Chapter 8 1 Given the...

• Notes
• 3

This preview shows pages 1–2. Sign up to view the full content.

Practice Questions - Chapter 8 1. Given the risk of XYZ Corp. common stock, your required rate of return is 16%. Given the current economic conditions and the current market price of the stock, you determine that the stock's expected return for the upcoming year is 14%. Which of the following is true? a) The stock is overpriced. d) The stock price should rise. b) The stock is underpriced. e) Both B and D are correct. c) The stock is correctly priced. 2. Medical Supply Company has a beta of 1.55 and recently paid a common stock dividend of \$3.47. If the return on Treasury securities is currently 7.5% and the return on the S&P 500 index is 12%, what is the required rate of return on the firm's common stock? 3. Dimensions Corporation's preferred stock recently paid its annual dividend of \$6.75 per share. The par value of the preferred stock is \$100. Investors require a 9% rate of return on this stock. What is the intrinsic value of the preferred stock?

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Spring '10
• Dividend

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern