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Test bank chapter 9

# Test bank chapter 9 - CHAPTER 9 STOCKS AND THEIR VALUATION...

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CHAPTER 9 STOCKS AND THEIR VALUATION 1, If D 1 = \$2.00, g (which is constant) = 6%, and P 0 = \$40, what is the stock’s expected dividend yield for the coming year? a. 5.0% b. 6.0% c. 7.0% d. 8.0% e. 9.0% 4, If D 1 = \$2.00, g (which is constant) = 6%, and P 0 = \$40, what is the stock’s expected total return for the coming year? a. 10.8% b. 11.0% c. 11.2% d. 11.4% e. 11.6% 10, Hahn Manufacturing is expected to pay a dividend of \$1.00 per share at the end of the year (D1 = \$1.00). The stock sells for \$40 per share, and its required rate of return is 11%. The dividend is expected to grow at a constant rate, g, forever. What is Hahn's expected growth rate? a. 8.00% b. 8.50% c. 9.00% d. 9.50% e. 10.00% 13, The Lashgari Company is expected to pay a dividend of \$1 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5% per year in the future. The company's beta is 1.2, the market risk premium is 5%, and the risk-free rate is 3%. What is the company's current stock price? a. \$15.00 b. \$20.00 c. \$25.00 d. \$30.00 e. \$35.00 18, Keys Inc's stock has a required rate of return of 10%, and it sells for \$40 per share. Keys' dividend is expected to grow at a constant rate of 7% per year. What was Keys' last dividend, D 0 ?

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