assign3v2[1] - FIN500 Assignment 3(individual work Total...

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Due 02/14/11 9:00 pm California time Assignment 3 tests your understanding on contents in Chapter 7, 8. Your completed Assignment 3 should be saved and submitted as a word document, the filename should begin as assign3, then your last name and first letter of your first name. For example, if Betty Jones is submitting her answer to Assignment 3, she should save the file in word document format and name it as assign3JonesB. Your completed work then should be sent to [email protected] no later than 02/14/11 9:00 pm California time. 10% of a course work’s points will be deducted if it’s not named or formatted as required. Part I. Multiple choice questions/problems: only one choice is correct. Each question/problem is worth 0.5 point, the total are 5 points 1. Other things equal, when residual cash flows are low, stock values will be A. unchanged. B. low. C. high. D. unpredictable. 2. Investors buy stock at the A. dealer price. B. bid price. C. quoted ask price. D. broker price. 3. Which of the following statements is most correct ? A. The stock valuation model, P 0 = D 1 / (i - g), can be used for firms which have negative growth rates. B. If a stock has a required rate of return i = 12 percent, and its dividend grows at a constant rate of 5 percent, this implies that the stock’s dividend yield is 5 percent. C. The price of a stock is the present value of all expected future dividends, discounted at
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assign3v2[1] - FIN500 Assignment 3(individual work Total...

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