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 model suggests that the required return on Duke stock is:
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 growth model.
C) Capital Asset Pricing Model.
D) Earnin
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%
C) 4.5%
D) 10.1%
E) 11.2%
Answer: B
Response: R = ($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 bond with a face value of $,000 has annual coupon payment
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 involving
_ projects.
A) mutually exclusive
B) independent
C)
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 years from now?
A) $253.14
B) $232.52
C) $310.41
D) $3
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 = 14%
2.ABC Company's preferred stock is selling for $3
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 IRR
D) is simplified by the fact that future cash flows
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 amount of a bond that is repaid at the end of the loan ter
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 holder of the bond will realize a capital gain if the bo
Assignment Print View
Score:
1.
250/250
Points
Page 1 of 19
100
%
Award: 10 out of 10.00 points
A preferred stock pays a $4.50 annual dividend. What is the maximum price you are willing to pay for one
share of this stock today if your required return is 8