Quiz3practice

Quiz3practice - Baruch College Finance 3610 Professor J....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Baruch College Professor J. Wang Finance 3610 Spring 2005 Quiz 3 (Practice Problems) 1 The rate at which the stock price is expected to appreciate (or depreciate) is the: a. Current yield. b. Total yield. c. Dividend yield. d. Capital gains yield. e. Earnings yield. 2 Common stock valuation requires, among other things, information regarding the: I. Expected dividend growth rate. II. Current dividend payment. III. Par value of the common stock. a. I only b. I and II only c. I and III only d. II and III only e. I, II, and III 3 The payback rule can be best stated as: a. An investment is acceptable if its calculated payback period is less than some prespecified number of years. b. An investment should be accepted if the payback is positive and rejected if it is negative. a. An investment should be rejected if the payback is positive and accepted if it is negative. b. An investment is acceptable if its calculated payback period is greater than some prespecified number of years. 4 To find the we begin by setting the NPV of a project equal to zero. a. payback period b. discounted payback period c. internal rate of return d. profitability index e. average accounting return 5 If Y, Inc. stock closed at $25 and the current quarterly dividend is $0.25 per share, what dividend yield would be reported for the stock in The Wall Street Journal ? a. 1.0% b. 2.0% c. 3.0% d. 4.0% e. 5.0%
Background image of page 1

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

View Full DocumentRight Arrow Icon
6 The current price of XYZ stock is $80.00. XYZ pays one dividend per year. Dividends are expected to grow at 5% indefinitely and the most recent dividend was $2.75. What is the required rate of return on XYZ stock? a. 7.3% b. 8.6% c. 9.5% d. 10.6% e. 11.2% 7 What would you pay today for a stock that is expected to make a $2 dividend in one year if the expected dividend growth rate is 5% and you require a 12% return on your investment? a. $28.57 b. $29.33 c. $31.43 d. $43.14 e. $54.30 8 Killnum Corp. announces that the dividend for the next year will be $2.50 per share rather than the originally expected $1.50 per share. From then on, it is expected that dividends will resume their historical constant growth rate of 5% per year. What would you expect to happen to the price of the stock? Ignore any tax effects.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/30/2011 for the course FIN 00 taught by Professor Dr. during the Spring '11 term at S. Connecticut.

Page1 / 6

Quiz3practice - Baruch College Finance 3610 Professor J....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online