1. For the current year, the expected dividend per share is:
A) $0.25
B) $1.00
C) $2.00
D) $3.30
E) $4.00
Answer: B
2. Assume the expected growth rate in dividends is 10%. Then the constant
growth mod
1. The current price of XYZ stock is $30.00. Dividends are expected to grow
at 5% indefinitely and the most recent dividend was $2.25. What is the
required rate of return on XYZ stock?
A) 2.3%
B) 3.2%
1. The price a dealer is willing to accept for selling a security to an investor is
called the:
A) Equilibrium price.
B) Auction price.
C) Bid price.
D) Ask price.
E) Bid-ask spread.
Answer: D
2. A bo
1. You own some manufacturing equipment that must be replaced. Two
different suppliers present a purchase and installation plan for your
consideration. This is an example of a business decision involv
1.Suppose you purchase a zero coupon bond with a face value of $1,000 and a
maturity of 25 years, for $130. If the yield to maturity on the bond remains
unchanged, what will the price of the bond be 5
1. A stock that pays a constant dividend of $1.50 forever currently sells for
$10.21. What is the required rate of return?
A) 10%
B) 12%
C) 13%
D) 14%
E) 15%
Answer: D
Response: $10.21 = $1.50 / R; R
1. Second present value _.
A) is equal to the initial investment in a project
B) is equal to the present value of the project benefits
C) is equal to zero when the discount rate used is equal to the I
1. The stated interest payment, in dollars, made on a bond each period is
called the bond's:
A) Coupon.
B) Face value.
C) Maturity.
D) Yield to maturity.
E) Coupon rate.
Answer: A
2. The principal amo
1. When pricing bonds, if a bond's coupon rate is less than the required rate
of return, then:
A) The holder of the bond is assured of a profit regardless of when the
bond is eventually sold.
B) The h
1. The stock valuation model that determines the current stock price as the
next dividend divided by the (discount rate less the dividend growth rate) is
called the:
A) Zero growth model.
B) Dividend