Question 1

There are four open positions on the board of directors of Double Tree Hotels.The company has 360,000 shares of stock outstanding.Each share is entitled to one vote.How many shares of stock must you own to guarantee your personal election to the board of directors if the firm uses cumulative voting?

Accepted Answer

A)  36,001 shares
B)  75,001 shares
C)  77,001 shares
D)  72,000 shares
E)  72,001 sharesF) A) and B)
G) A) and C)

Question 2

Which one of the following parties on the NYSE floor posts bid and asked prices?

Accepted Answer

A)  Floor traders
B)  DMMs
C)  Floor brokers
D)  Commission brokers
E)  Fee brokersF) A) and E)
G) D) and E)

Question 3

Laura Lynn owns 20,700 shares of Global Exporters.Her shares have a total market value of $787,270.In total,the firm has 65,000 shares outstanding.Each share is entitled to one vote under the straight voting policy of the firm.The next election is in four months at which time two directors are up for election.How much more must Laura Lynn invest in this firm to guarantee that she is elected to the board?

Accepted Answer

A)  $0
B)  $396,554
C)  $448,820
D)  $498,406
E)  $547,478F) A) and B)
G) C) and D)

Question 4

Donuts Delite just paid an annual dividend of $1.10 a share.The firm expects to increase this dividend by 8 percent per year the following three years and then decrease the dividend growth to 2 percent annually thereafter.Which one of the following is the correct computation of the dividend for year 7?

Accepted Answer

A)  ($1.10)  (1.08 × 3)  (1.02 × 4) 
B)  ($1.10)  (1.08 × 3)  (1.02 × 3) 
C)  ($1.10)  (1.08) 3 (1.02) 4
D)  ($1.10)  (1.08) 3 (1.02) 3
E)  ($1.10)  (1.08) 3 (1.02) 2F) B) and D)
G) C) and D)

Question 5

Which one of the following statements is correct?

Accepted Answer

A)  From a legal perspective, preferred stock is a form of corporate equity.
B)  All classes of stock must have equal voting rights per share.
C)  Common shareholders elect the corporate directors while the preferred shareholders vote on mergers and acquisitions.
D)  Dividends are tax-free income for individual investors.
E)  Shareholders prefer noncumulative dividends over cumulative dividends.F) None of the above
G) A) and B)

Question 6

Tim Taylor Tools is a young start-up company.No dividends will be paid on the stock over the next eight years because the firm needs to plow back its earnings to fuel growth.The company will then pay a $9 per share dividend in year 8 and will increase the dividend by 4 percent per year thereafter.If the required return on this stock is 12 percent,what is the current share price?

Accepted Answer

A)  $42.64
B)  $45.44
C)  $57.23
D)  $81.95
E)  $100.13F) B) and C)
G) All of the above

Question 7

A stock has paid dividends of $1.80,$1.85,$2.00,$2.20,and $2.25 over the past five years,respectively.What is the average capital gains yield?

Accepted Answer

A)  2.80 percent
B)  3.24 percent
C)  4.45 percent
D)  5.34 percent
E)  5.79 percentF) C) and D)
G) A) and D)

Question 8

Which one of the following generally pays a fixed dividend,receives first priority in dividend payment,and maintains the right to a dividend payment,even if that payment is deferred?

Accepted Answer

A)  Cumulative common
B)  Noncumulative common
C)  Noncumulative preferred
D)  Cumulative preferred
E)  Senior commonF) A) and D)
G) A) and B)

Question 9

Which one of the following types of securities has no priority in a bankruptcy proceeding?

Accepted Answer

A)  Convertible bond
B)  Senior debt
C)  Common stock
D)  Preferred stock
E)  Straight bondF) B) and D)
G) A) and D)

Question 10

Given the following partial stock quote,what is the amount of the next annual dividend if yesterday's closing price was $23.60?

Accepted Answer

A)  $0.78
B)  $0.81
C)  $1.15
D)  $1.19
E)  $1.23F) None of the above
G) B) and D)

Question 11

A firm expects to increase its annual dividend by 20 percent per year for the next two years and by 15 percent per year for the following two years.After that,the company plans to pay a constant annual dividend of $3 a share.The last dividend paid was $1 a share.What is the current value of this stock if the required rate of return is 12 percent?

Accepted Answer

A)  $17.71
B)  $18.97
C)  $20.50
D)  $21.08
E)  $21.69F) A) and E)
G) A) and D)

Question 12

This morning,you purchased a stock that will pay an annual dividend of $1.90 per share next year.You require a 12 percent rate of return and the annual dividend increases at 3.5 percent annually.What will your capital gain be on this stock if you sell it three years from now?

Accepted Answer

A)  $2.43
B)  $2.51
C)  $2.63
D)  $2.87
E)  $2.92F) D) and E)
G) C) and D)

Question 13

The dividend yield is defined as:

Accepted Answer

A)  the current annual cash dividend divided by the current market price per share.
B)  the current annual cash dividend divided by the current book value per share.
C)  next year's expected cash dividend divided by the current market price per share.
D)  next year's expected cash dividend divided by the current book value per share.
E)  next year's expected cash dividend divided by next year's expected market price per share.F) A) and E)
G) A) and D)

Question 14

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Accepted Answer

A)  National
B)  Capital
C)  Regional
D)  Global Select
E)  GlobalF) C) and D)
G) C) and E)

Question 15

The dividend growth model can be used to value the stock of firms that pay which type of dividends?
I.Constant annual dividend
II.Annual dividend with a constant increasing rate of growth
III.Annual dividend with a constant decreasing rate of growth
IV.Zero dividend

Accepted Answer

A)  I only
B)  II only
C)  II and III only
D)  I, II, and III only
E)  I, II, III, and IVF) A) and E)
G) None of the above

Question 16

An individual who executes buy and sell orders on the floor of an exchange for a fee is called a:

Accepted Answer

A)  floor broker.
B)  DMM.
C)  floor trader.
D)  proxy.
E)  flow specialist.F) A) and B)
G) A) and C)

Question 17

The NYSE:

Accepted Answer

A)  presently conducts all of its trading through SuperDOT.
B)  is a dealer market.
C)  is in the business of attracting order flow.
D)  is solely a primary market.
E)  is based on a multiple market maker system.F) A) and C)
G) C) and D)

Question 18

Kate owns a stock with a market price of $31 per share.This stock pays a constant annual dividend of $0.60 per share.If the price of the stock suddenly increases to $36 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.

Accepted Answer

A)  I only
B)  II only
C)  III only
D)  I and III only
E)  II and IV onlyF) A) and D)
G) A) and C)

Question 19

Swan Lake Marina is expected to pay an annual dividend of $1.58 next year.The stock is selling for $18.53 a share and has a total return of 12 percent.What is the dividend growth rate?

Accepted Answer

A)  2.82 percent
B)  3.03 percent
C)  3.28 percent
D)  3.47 percent
E)  3.66 percentF) All of the above
G) B) and D)

Question 20

Newly issued securities are sold to investors in which one of the following markets?

Accepted Answer

A)  Proxy
B)  Stated value
C)  Inside
D)  Secondary
E)  PrimaryF) A) and D)
G) A) and E)

Exam 7: Equity Markets and Stock Valuation

The NYSE:

Correct Answer
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Swan Lake Marina is expected to pay an annual dividend of $1.58 next year.The stock is selling for $18.53 a share and has a total return of 12 percent.What is the dividend growth rate?

Correct Answer
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Correct Answer
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Correct Answer
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The dividend yield is defined as:

Correct Answer
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Correct Answer
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An individual who executes buy and sell orders on the floor of an exchange for a fee is called a:

Correct Answer
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Which one of the following parties on the NYSE floor posts bid and asked prices?

Correct Answer
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The dividend growth model can be used to value the stock of firms that pay which type of dividends? I.Constant annual dividend II.Annual dividend with a constant increasing rate of growth III.Annual dividend with a constant decreasing rate of growth IV.Zero dividend

Correct Answer
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Which one of the following generally pays a fixed dividend,receives first priority in dividend payment,and maintains the right to a dividend payment,even if that payment is deferred?

Correct Answer
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Newly issued securities are sold to investors in which one of the following markets?

Correct Answer
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Correct Answer
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Correct Answer
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This morning,you purchased a stock that will pay an annual dividend of $1.90 per share next year.You require a 12 percent rate of return and the annual dividend increases at 3.5 percent annually.What will your capital gain be on this stock if you sell it three years from now?

Correct Answer
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Which one of the following statements is correct?

Correct Answer
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The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Correct Answer
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Which one of the following types of securities has no priority in a bankruptcy proceeding?

Correct Answer
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There are four open positions on the board of directors of Double Tree Hotels.The company has 360,000 shares of stock outstanding.Each share is entitled to one vote.How many shares of stock must you own to guarantee your personal election to the board of directors if the firm uses cumulative voting?

Correct Answer
verified

A stock has paid dividends of $1.80,$1.85,$2.00,$2.20,and $2.25 over the past five years,respectively.What is the average capital gains yield?

Correct Answer
verified

Given the following partial stock quote,what is the amount of the next annual dividend if yesterday's closing price was $23.60?

Correct Answer
verified

Exam 7: Equity Markets and Stock Valuation

The NYSE:

Correct AnswerverifiedShow Answer

Swan Lake Marina is expected to pay an annual dividend of $1.58 next year.The stock is selling for $18.53 a share and has a total return of 12 percent.What is the dividend growth rate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The dividend yield is defined as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An individual who executes buy and sell orders on the floor of an exchange for a fee is called a:

Correct AnswerverifiedShow Answer

Which one of the following parties on the NYSE floor posts bid and asked prices?

Correct AnswerverifiedShow Answer

The dividend growth model can be used to value the stock of firms that pay which type of dividends? I.Constant annual dividend II.Annual dividend with a constant increasing rate of growth III.Annual dividend with a constant decreasing rate of growth IV.Zero dividend

Correct AnswerverifiedShow Answer

Which one of the following generally pays a fixed dividend,receives first priority in dividend payment,and maintains the right to a dividend payment,even if that payment is deferred?

Correct AnswerverifiedShow Answer

Newly issued securities are sold to investors in which one of the following markets?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

This morning,you purchased a stock that will pay an annual dividend of $1.90 per share next year.You require a 12 percent rate of return and the annual dividend increases at 3.5 percent annually.What will your capital gain be on this stock if you sell it three years from now?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets?

Correct AnswerverifiedShow Answer

Which one of the following types of securities has no priority in a bankruptcy proceeding?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A stock has paid dividends of $1.80,$1.85,$2.00,$2.20,and $2.25 over the past five years,respectively.What is the average capital gains yield?

Correct AnswerverifiedShow Answer

Given the following partial stock quote,what is the amount of the next annual dividend if yesterday's closing price was $23.60?

Correct AnswerverifiedShow Answer

Correct Answer
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