2022公司理财精要题库

Chapter 07Equity Markets and Stock Valuation  Multiple Choice Questions 1. What is the name given to the model that computes the present value of a stock by dividing next year's annual dividend amount by the difference between the discount rate and the rate of change in the annual dividend amount? A. Stock pricing modelB. Equity pricing modelC. Capital gain modelD. Dividend growth modelE. Present value model 2. The dividend yield is defined as: 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. 3. The capital gains yield equals which one of the following? A. Total yieldB. Current discount rateC. Market rate of returnD. Dividend yieldE. Dividend growth rate 4. Which one of the following types of securities has no priority in a bankruptcy proceeding? A. Convertible bondB. Senior debtC. Common stockD. Preferred stockE. Straight bond 5. Mary owns 100 shares of stock. Each share entitles her to one vote per open seat on the board of directors. Assume there are 3 open seats in the current election and Mary casts all 300 of her votes for a single candidate. What is the term used to describe this type of voting? A. ProxyB. AggregateC. CumulativeD. StraightE. Condensed 6. There are two open seats on the board of directors. If two separate votes occur to elect the new directors, the firm is using a type of voting that is best described as _ voting. A. simultaneousB. straightC. proxyD. cumulativeE. sequential 7. Kate could not attend the last shareholders meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kate's shares were voted? A. StraightB. CumulativeC. Consent-formD. ProxyE. In absentia 8. Dividends are best defined as: A. cash payments to shareholders.B. cash payments to either bondholders or shareholders.C. cash or stock payments to shareholders.D. cash or stock payments to either bondholders or shareholders.E. distributions of stock to current shareholders. 9. 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? A. Cumulative commonB. Noncumulative commonC. Noncumulative preferredD. Cumulative preferredE. Senior common 10. Newly issued securities are sold to investors in which one of the following markets? A. ProxyB. Stated valueC. InsideD. SecondaryE. Primary 11. What is the market called that allows shareholders to resell their shares to other investors? A. PrimaryB. ProxyC. SecondaryD. InsideE. Initial 12. An agent who buys and sells securities from inventory is called a: A. floor trader.B. dealer.C. commission broker.D. broker.E. floor broker. 13. A broker is an agent who: A. trades on the floor of an exchange for himself or herself.B. buys and sells from inventory.C. offers new securities for sale to dealers only.D. who is ready to buy or sell at any time.E. brings buyers and sellers together. 14. Any person who owns a license to trade on the NYSE is called a: A. dealer.B. floor trader.C. specialist.D. member.E. proxy. 15. A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a: A. floor trader.B. specialist.C. runner.D. commission broker.E. market maker. 16. A specialist is a(n): A. employee who executes orders to buy and sell for clients of his or her brokerage firm.B. individual who trades on the floor of an exchange for his or her personal account.C. NYSE member who functions as a dealer for a limited number of securities.D. broker who buys and sells securities from a market maker.E. trader who only deals with primary offerings. 17. An individual who executes buy and sell orders on the floor of an exchange for a fee is called a: A. floor broker.B. specialist.C. floor trader.D. proxy.E. flow specialist. 18. The electronic system that transmits buy and sell orders directly to a specialist on the floor of the NYSE is called: A. NASDAQ.B. SuperDOT.C. TICKER.D. ECN.E. ORDFLOW. 19. The owner of a trading license who trades on the floor of the NYSE for his or her personal account is called a(n): A. specialist.B. independent broker.C. floor trader.D. stand-alone agent.E. dealer. 20. The stream of customer instructions to buy and sell securities is called the: A. order flow.B. market maker.C. execution stream.D. operations flow.E. buyer's stream. 21. The specific location on the floor of an exchange where a particular security is traded is called a: A. box office.B. figure 6.C. specialist's post.D. trading booth.E. seat. 22. Inside quotes are defined as the: A. bid and asked prices presented by NYSE specialists.B. last bid and asked price offered prior to the market close.C. lowest asked and highest bid offers.D. daily opening bid and asked quotes.E. last traded bid and asked prices. 23. Which one of the following is a web site that enables Lester to sell his shares of ABC stock directly to Marti? A. SuperDOTB. POSTC. ECND. SEATE. eNET 24. Which one of the following will increase the current value of a stock? A. Decrease in the dividend growth rateB. Increase in the required returnC. Increase in the market rate of returnD. Decrease in the expected dividend for next yearE. Increase in the capital gains yield 25. The price of a stock at year 4 can be expressed as: A. D0 / (R + G4).B. D0 ´ (1 + R)5.C. D1 ´ (1 + R)5.D. D4/(R-g).E. D5/(R-g). 26. Delfino's expects to pay an annual dividend of $1.50 per share next year. What is the anticipated dividend for year 5 if the firm increases its dividend by 2 percent annually? A. $1.50 ´ (1.02)1B. $1.50 ´ (1.02)2C. $1.50 ´ (1.02)3D. $1.50 ´ (1.02)4E. $1.50 ´ (1.02)5 27. The required return on a stock is equal to which one of the following if the dividend on the stock decreases by 1 percent per year? A. (P0/D1)-gB. (D1/P0)/gC. Dividend yield + capital gains yieldD. Dividend yield - capital gains yieldE. Dividend yield ´ capital gains yield 28. 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 3 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? 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)4D. ($1.10) (1.08)3 (1.02)3E. ($1.10) (1.08)3 (1.02)2 29. Aardvark, Inc. pays a constant annual dividend. At the end of trading on Wednesday, the price of its stock was $28. At the end of trading on the following day, the stock price was $27. As a result of the decline in the stock's price, the dividend yield _ while the capital gains yield _. A. remained constant; remained constantB. increased; remained constantC. increased; increasedD. decreased; remained constantE. decreased; decreased 30. Which one of the following must equal zero if a firm pays a constant annual dividend? A. Dividend yieldB. Capital gains yieldC. Total returnD. Market value per shareE. Book value per share 31. The dividend growth model can be used to value the stock of firms which pay which type of dividends? I. constant annual dividendII. annual dividend with a constant increasing rate of growthIII. annual dividend with a constant decreasing rate of growthIV. zero dividend A. I onlyB. II onlyC. II and III onlyD. I, II, and III onlyE. I, II, III, and IV 32. 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. A. I onlyB. II onlyC. III onlyD. I and III onlyE. II and IV only 33. Computing the present value of a growing perpetuity is most similar to computing the current value of which one of the following? A. Non-dividend-paying stockB. Stock with a constant dividendC. Stock with irregular dividendsD. Stock with a constant growth dividendE. Stock with growing dividends for a limited period of time 34. Jensen Shipping has four open seats on its board of directors. How many shares will a shareholder need to control to ensure that his or her candidate is elected to the board given the fact that the firm uses straight voting? Assume one share equals one vote. A. 20 percent of the shares plus one voteB. 25 percent of the shares plus one voteC. 1/3 of the shares plus one voteD. 50 percent of the shares plus one voteE. 51 percent of the shares plus one vote 35. Gleason, Inc. elects its board of directors on a staggered basis using cumulative voting. This implies that: A. if there are two open seats, then the candidate with the highest number of votes and the candidate with the lowest number of votes will be selected.B. the candidates for the open seats are voted for in individual elections.C. all open positions are filled with one round of voting, assuming there are no tie votes.D. shareholders can accumulate their votes over multiple years and cast all those votes in one election.E. the firm's entire board of directors is elected annually in one combined election. 36. Which one of the following statements is correct? 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. 37. Which one of the following statements is correct? A. Both preferred stock and corporate bonds can be callable.B. Both preferred stock and corporate bonds have a stated liquidation value of $1,000 each.C. Interest payments to bondholders as well as dividend payments to preferred shareholders are tax deductible expenses for the issuing firm.D. Bondholders generally receive a fixed payment while preferred shareholders receive a variable payment.E. Preferred shareholders receive preferential treatment over bondholders in a liquidation. 38. If shareholders are granted a preemptive right they will: A. be given the choice of receiving dividends either in cash or in additional shares of stock.B. be paid dividends prior to the preferred shareholders during the preemptive period.C. be entitled to two votes per share of stock.D. be able to choose the timing and amount of any future dividends.E. have priority in the purchase of any newly issued shares. 39. On which one of the following dates do dividends become a liability of the issuer for accounting purposes? A. First day of the fiscal year in which the dividend is expected to be paidB. Twelve months prior to the expected dividend payment dateC. On the declaration dateD. On the date of recordE. On the date of payment 40. Dividends are which one of the following? A. Payable at the discretion of a firm's presidentB. Treated as a tax-deductible expense to the paying firmC. Paid out of aftertax profitsD. Paid to holders of record as of the declaration dateE. Only partially taxable to high-income individual shareholders 41. You have agreed to pay a five percent commission to your best friend if he can locate a buyer for your car. This arrangement is most similar to the compensation arrangement for which one of these individuals who is involved with the stock market? A. SpecialistB. Floor traderC. Market makerD. Commission brokerE. Dealer 42. To be a member of the NYSE, you must: A. be a primary dealer.B. buy a seat.C. own a trading license.D. be registered as a floor trader.E. be a specialist. 43. Which one of the following players on the floor of the NYSE is obligated to maintain a fair, orderly market for a limited number of securities? A. SpecialistB. Floor traderC. $2 brokerD. Commission brokerE. Floor broker 44. The NYSE: 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. 45. Which one of the following parties on the NYSE floor post bid and asked prices? A. Floor tradersB. SpecialistsC. Floor brokersD. Commission brokersE. Fee brokers 46. Many of the smaller sell orders sent to the floor of the NYSE are: A. handled by the floor traders.B. purchased by the commission brokers.C. electronically transmitted to the specialists.D. executed on an ECN.E. executed in the primary market. 47. If a trade is made "in the crowd", the trade has occurred: A. between a broker and a specialist.B. between two brokers.C. electronically on NASDAQ.D. on SuperDOT.E. on an ECN. 48. The more actively traded large companies that are listed on NASDAQ are traded in which one of the NASDAQ markets? A. NationalB. CapitalC. RegionalD. Global SelectE. Global 49. Which one of the following features applies to NASDAQ but not the NYSE? A. Trading in the crowdB. Multiple market maker systemC. SuperDotD. Broker marketE. Physical trading floor 50. Companies can list their stock on which one of the following without having to meet listing requirements or filing financial statements with the SEC? A. NASDAQ Capital MarketB. Over-the-Counter Bulletin BoardC. Pink sheetsD. NASDAQ Global MarketE. NYSE 51. Keller Metals common stock is selling for $36 a share and has a dividend yield of 3.2 percent. What is the dividend amount? A. $0.32B. $1.15C. $3.49D. $11.25E. $11.52 52. The Glass Ceiling paid an annual dividend of $2.20 per share last year. Management just announced that future dividends will increase by 2.8 percent annually. What is the amount of the expected dividend in year 5? A. $2.39B. $2.41C. $2.46D. $2.53E. $2.58 53. The Pancake House pays a constant annual dividend of $1.25 per share. How much are you willing to pay for one share if you require a 15 percent rate of return? A. $7.86B. $8.33C. $10.87D. $11.04E. $11.38 54. Shoreline Foods pays a constant annual dividend of $1.60 a share and currently sells for $28.50 a share. What is the rate of return? A. 4.56 percentB. 5.39 percentC. 5.61 percentD. 6.63 percentE. 6.91 percent 55. The common stock of Green Garden Flowers is selling for $24 a share. The company pays a constant annual dividend and has a total return of 3.8 percent. What is the amount of the dividend? A. $0.38B. $0.76C. $0.91D. $1.38E. $1.54 56. Healthy Foods just paid its annual dividend of $1.45 a share. The firm recently announced that all future dividends will be increased by 2.8 percent annually. What is one share of this stock worth to you if you require a 14 percent rate of return? A. $12.56B. $12.95C. $13.31D. $13.68E. $14.07 57. Plastics, Inc. will pay an annual dividend of $1.85 next year. The company just announced that future dividends will be increasing by 2.25 percent annually. How much are you willing to pay for one share of this stock if you require a 16 percent return? A. $13.45B. $13.61C. $13.76D. $14.02E. $14.45 58. The Printing Company stock is selling for $32.60 a share based on a 14 percent rate of return. What is the amount of the next annual dividend if the dividends are increasing by 2.5 percent annually? A. $3.48B. $3.52C. $3.57D. $3.66E. $3.75 59. The common stock of Mid-Towne Movers is selling for $33 a share and has a 9 percent rate of return. The growth rate of the dividends is 1 percent annually. What is the amount of the next annual dividend? A. $2.58B. $2.61C. $2.64D. $2.67E. $2.70 60. Delphin's Marina is expected to pay an annual dividend of $0.58 next year. The stock is selling for $8.53 a share and has a total return of 12 percent. What is the dividend growth rate? A. 3.82 percentB. 4.03 percentC. 4.28 percentD. 5.20 percentE. 5.49 percent 61. Klaus Toys just paid its annual dividend of $1.40. The required return is 16 percent and the dividend growth rate is 2 percent. What is the expected value of this stock five years from now? A. $11.04B. $11.26C. $11.67D. $12.41E. $12.58 62. 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? A. $2.43B. $2.51C. $2.63D. $2.87E. $2.92 63. Blackwell Ink is losing significant market share and thus its managers have decided to decrease the firm's annual dividend. The last annual dividend was $0.90 a share but all future dividends will be decreased by 5 percent annually. What is a share of this stock worth today at a required return of 15 percent? A. $4.07B. $4.28C. $4.49D. $4.72E. $4.95 64. Lamey Headstones increases its annual dividend by 1.5 percent annually. The stock sells for $28.40 a share at a required return of 14 percent. What is the amount of the last dividend this company paid? A. $3.50B. $3.55C. $3.60D. $3.65E. $3.70 65. The common stock of Tasty Treats is valued at $10.80 a share. The company increases its dividend by 8 percent annually and expects its next dividend to be $0.20 per share. What is the total rate of return on this stock? A. 8.64 percentB. 9.12 percentC. 9.40 percentD. 9.85 percentE. 10.64 percent 66. River Rock, Inc. just paid an annual dividend of $2.80. The company has increased its dividend by 2.5 percent a year for the past ten years and expects to continue doing so. What will a share of this stock be worth six years from now if the required return is 16 percent? A. $23.60B. $24.65C. $25.08D. $25.50E. $26.90 67. The Cart Wheel plans to pay an annual dividend of $1.20 per share next year, $1.00 per share a year for the following two years, and then cease paying dividends altogether. How much is one share of this stock worth to you today if you require a 17 percent rate of return? A. $2.38B. $2.43C. $2.56D. $2.60E. $2.64 68. Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. Yesterday, the firm announced the dividend will increase next year by 10 percent and will stay at the level through year three, after which time the dividends will increase by 2 percent annually. The required return on this stock is 12 percent. What is the current value per share? A. $25.51B. $26.08C. $24.57D. $26.02E. $26.84 69. Auto Transmissions is expected to pay annual dividends of $1.90 and $2.10 over the next two years, respectively. After that, the company expects to pay a constant dividend of $2.30 a share. What is the value of this stock at a required return of 15 percent? A.