q2+version1 (1)

q2+version1 (1) - MGT 3062 FINANCIAL MANGEMENT SUMMER 2009...

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MGT 3062 FINANCIAL MANGEMENT SUMMER 2009 QUIZ 2 Student: ___________________________________________________________________________ Choose the BEST answer to each question. Bubble in your answer on the form provided. For computational questions, show your work (for possible partial credit). If you feel that the answer is not provided, show your work, explain your assumptions, and write your answer on the exam. Questions are worth 3 points each. Remove all hats and dark glasses. If you have to go to the restroom, go now. No electronic devices allowed. You may not use your cell phone as a calculator. As a courtesy to your classmates, no questions are allowed after initial instructions are given. Ethics Challenge: I swear by everything I hold sacred and my family honor that: the work on this exam is my own without any outside assistance; that I did not provide assistance to another classmate; that I used no electronic devices for information storage, retrieval, or communications; that I have abided by the Georgia Tech honor code in the preparation and execution of this exam. Signature:________________________________________________________________ 1. Cellular Talk is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 25 percent a year for the next three years and then decreasing the growth rate to 6 percent per year. The company just paid its annual dividend in the amount of $0.80 per share. What is the current value of one share of this stock if the required rate of return is 17 percent? A. $11.17 B. $15.06 C. $12.14 D. $14.27 E. $12.94 2. A corporate bond is quoted at a current price of 103.68. What is the market price if the face value is $5,000? A. $4,785.00 B. $5,210.68 C. $5,184.00 D. $4,822.53 E. $5,103.68 3. The annual coupon payment divided by the market price of a bond is called the: A. current yield. B. yield to maturity. C. capital gains yield. D. bid-ask spread. E. coupon rate. 4. An indenture is: A. the written record of the original and all subsequent holders of each individual bond comprising a debt issue. B. the annual amount which a bond issuer agrees to pay as interest on the debt. C. a bond which is secured by the fixed assets which are owned by the bond issuer. D. a bond which is past its maturity date but has yet to be repaid. E. the written agreement between the bond issuer and the bondholders which details the terms of the debt issue.
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5. Preferred shareholders are granted: A. annual dividends equal to a set percentage of the preferred stock's market value. B. the right to receive unpaid dividend payments provided the stock is noncumulative. C. annual dividends equal to a set percentage of the firm's annual net income. D. the right to dividends prior to common shareholders.
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q2+version1 (1) - MGT 3062 FINANCIAL MANGEMENT SUMMER 2009...

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