Exam2 FIN370 B Key (1) - Exam2 FIN370-02 Winter 2011 Key...

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Exam2 FIN370-02 Winter 2011 Key Version B 1. The market where one shareholder sells shares to another shareholder is called the _____ market. A. main B. primary C. secondary D. dealer E. principal BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 007 #11 SECTION: 7.3 TOPIC: SECONDARY MARKET TYPE: DEFINITIONS 2. Sid's Video Store will pay an annual dividend of $2.15 next month. The company just announced that future dividends will be increasing by 1.5 percent annually. How much are you willing to pay for one share of this stock if your required return is 14 percent? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 007 #57 SECTION: 7.1 TOPIC: DIVIDEND GROWTH MODEL TYPE: PROBLEMS
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3. You plan to save $20 every week for the next five years. You expect to earn 6 percent for the first year and 7.5 percent for the last four years. How much do you expect to have saved at the end of the five years? BLOOMS TAXONOMY QUESTION TYPE: ANALYSIS LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: CHALLENGE Ross - Chapter 005 #79 SECTION: 5.1 TOPIC: ANNUITY WITH CHANGING INTEREST RATES TYPE: PROBLEMS 4. Kimberly is considering an investment of $2,000 each year for 15 years. The investment will pay 8 percent interest. How much will this investment be worth at the end of the 15 years? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 005 #66 SECTION: 5.2 TOPIC: ANNUITY FUTURE VALUE TYPE: PROBLEMS 5. Julie owns a stock with a market price of $43 per share. This stock pays a constant annual dividend of $1.34 a share. If the price of the stock suddenly falls to $31 a share, you would expect the: I. dividend yield to increase. II. dividend yield to decrease. III. capital gains yield to increase. IV. capital gains yield to decrease. A. I and III only B. I only C. II and IV only D. II only E. III only BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 007 #32 SECTION: 7.1 TOPIC: DIVIDEND AND CAPITAL GAIN YIELDS TYPE: CONCEPTS
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6. Mr. Jones just won a lottery prize that will pay him $5,000 a year for thirty years. He will receive the first payment today. If Mr. Jones can earn 5.5 percent on his money, what are his winnings worth to him today? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 005 #69 SECTION: 5.2 TOPIC: ANNUITY DUE PRESENT VALUE TYPE: PROBLEMS
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