Question 1

Blasco International has sales of $389,700 and costs of $413,210.The company has 120,000 shares outstanding.What is the price-sales ratio if the stock has a book value of $19.20 per share and a market value per share of $8.60?

Accepted Answer

A)  2.65
B)  1.89
C)  2.23
D)  2.48
E)  2.37F) A) and B)
G) A) and C)

Question 2

Which one of the following will increase the current value of a stock?

Accepted Answer

A)  Decrease in the dividend growth rate
B)  Increase in the required return
C)  Increase in the market rate of return
D)  Decrease in the expected dividend for next year
E)  Increase in the capital gains yieldF) A) and E)
G) B) and D)

Question 3

Laura owns 6,700 shares of GP Global stock worth $92,460.The firm has 15,000 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 four directors are up for election.How much more must Laura invest in this firm to guarantee her election to the board?

Accepted Answer

A)  $0
B)  $6,554.00
C)  $11,053.80
D)  $8,406.15
E)  $14,478.80F) All of the above
G) A) and D)

Question 4

The VIC Co.has preferred stock outstanding that pays a $4.50 dividend annually and sells for $48.20 per share.What is the rate of return?

Accepted Answer

A)  9.34 percent
B)  6.89 percent
C)  7.70 percent
D)  8.23 percent
E)  8.98 percentF) A) and E)
G) A) and D)

Question 5

Bernard Fashionista pays a constant annual dividend of $3.75 a share and currently sells for $48.50 a share.What is the rate of return?

Accepted Answer

A)  7.87 percent
B)  8.60 percent
C)  7.73 percent
D)  8.04 percent
E)  9.12 percentF) B) and D)
G) B) and C)

Question 6

Mary owns 100 shares of stock.Each share entitles her to one vote per open seat on the board of directors.Assume there are three 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?

Accepted Answer

A)  Proxy
B)  Aggregate
C)  Cumulative
D)  Straight
E)  CondensedF) A) and D)
G) D) and E)

Question 7

The Impulse Shopper recently paid an annual dividend of $1.13 per share.The company just announced that it is suspending all dividend payments on its common stock for the next five years.After that, the company expects to pay $.50 a share at the end of each year.At a required return of 18 percent, what is this stock worth today?

Accepted Answer

A)  $0
B)  $1.13
C)  $2.78
D)  $1.03
E)  $1.21F) A) and C)
G) C) and D)

Question 8

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 dividend increases at 3.5 percent annually.What will your capital gain be in dollars 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) B) and E)
G) C) and E)

Question 9

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 each share receives one vote.

Accepted Answer

A)  Twenty percent of the shares plus one share
B)  Twenty-five percent of the shares plus one share
C)  One-third of the shares plus one share
D)  Fifty percent of the shares plus one share
E)  Fifty-one percent of the shares plus one shareF) None of the above
G) A) and E)

Question 10

The constant growth model can be used to value the stock of firms that have which type(s)  of dividends?

Accepted Answer

A)  Dividends that change by either a constant amount or a constant rate
B)  Dividends that change annually by a constant amount or that are zero
C)  Dividends that change annually by a constant amount
D)  Dividends that are either constant or change annually at a constant rate
E)  Only dividends that increase at a constant rateF) All of the above
G) C) and D)

Question 11

Spiral Staircase is offering preferred stock which is referred to as 10-10 stock.This stock will pay an annual dividend of $10 a share starting 10 years from now.What is this stock worth to you today if you require a rate of return of 9.5 percent?

Accepted Answer

A)  $66.70
B)  $46.51
C)  $49.63
D)  $120.52
E)  $105.26F) A) and E)
G) A) and B)

Question 12

On which one of the following dates do dividends become a liability of the issuer for accounting purposes?

Accepted Answer

A)  First day of the fiscal year in which the dividend is expected to be paid
B)  Twelve months prior to the expected dividend payment date
C)  On the date the board declares the dividend
D)  On the date the company announces the dividend to the public
E)  On the date of paymentF) C) and D)
G) A) and B)

Question 13

Which one of the following statements is correct?

Accepted Answer

A)  Preferred stock can be callable.
B)  Preferred stock generally has a stated liquidation value of $1,000 per share.
C)  Dividend payments to preferred shareholders are tax-deductible expenses for the issuing firm.
D)  Preferred dividends are generally variable in amount.
E)  Preferred shareholders receive preferential treatment over bondholders in a liquidation.F) A) and E)
G) B) and D)

Question 14

In November 2013, the NYSE was acquired by:

Accepted Answer

A)  the Amsterdam Exchange.
B)  the Intercontinental Exchange.
C)  the Securities Exchange Commission.
D)  Euronext.
E)  the American Stock Exchange.F) B) and C)
G) A) and D)

Question 15

Resorts Corp.common stock is selling for $36.75 a share and has a dividend yield of 2.3 percent.What is the dividend amount?

Accepted Answer

A)  $.0.43
B)  $.0.85
C)  $4.21
D)  $6.21
E)  $8.41F) B) and E)
G) C) and E)

Question 16

If shareholders are granted a preemptive right they will:

Accepted Answer

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.F) A) and B)
G) A) and C)

Question 17

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 that level through Year 3, 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?

Accepted Answer

A)  $25.51
B)  $26.08
C)  $24.57
D)  $26.02
E)  $26.84F) B) and C)
G) C) and D)

Question 18

Any person who owns a license to trade on the NYSE is called a:

Accepted Answer

A)  dealer.
B)  floor trader.
C)  DMM.
D)  member.
E)  proxy.F) A) and B)
G) A) and C)

Question 19

An agent who buys and sells securities from inventory is called a:

Accepted Answer

A)  floor trader.
B)  dealer.
C)  commission broker.
D)  broker.
E)  floor broker.F) All of the above
G) A) and E)

Question 20

To be a member of the NYSE, you must:

Accepted Answer

A)  be a primary dealer.
B)  buy a seat.
C)  own a trading license.
D)  be registered as a floor trader.
E)  be a DMM.F) None of the above
G) C) and D)

Exam 7: Equity Markets and Stock Valuation

On which one of the following dates do dividends become a liability of the issuer for accounting purposes?

Correct Answer
verified

The constant growth model can be used to value the stock of firms that have which type(s) of dividends?

Correct Answer
verified

An agent who buys and sells securities from inventory is called a:

Correct Answer
verified

Correct Answer
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If shareholders are granted a preemptive right they will:

Correct Answer
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Mary owns 100 shares of stock.Each share entitles her to one vote per open seat on the board of directors.Assume there are three 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?

Correct Answer
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Any person who owns a license to trade on the NYSE is called a:

Correct Answer
verified

In November 2013, the NYSE was acquired by:

Correct Answer
verified

To be a member of the NYSE, you must:

Correct Answer
verified

Which one of the following will increase the current value of a stock?

Correct Answer
verified

Bernard Fashionista pays a constant annual dividend of $3.75 a share and currently sells for $48.50 a share.What is the rate of return?

Correct Answer
verified

Correct Answer
verified

Spiral Staircase is offering preferred stock which is referred to as 10-10 stock.This stock will pay an annual dividend of $10 a share starting 10 years from now.What is this stock worth to you today if you require a rate of return of 9.5 percent?

Correct Answer
verified

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 each share receives one vote.

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
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Correct Answer
verified

Blasco International has sales of $389,700 and costs of $413,210.The company has 120,000 shares outstanding.What is the price-sales ratio if the stock has a book value of $19.20 per share and a market value per share of $8.60?

Correct Answer
verified

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 dividend increases at 3.5 percent annually.What will your capital gain be in dollars on this stock if you sell it three years from now?

Correct Answer
verified

The VIC Co.has preferred stock outstanding that pays a $4.50 dividend annually and sells for $48.20 per share.What is the rate of return?

Correct Answer
verified

Resorts Corp.common stock is selling for $36.75 a share and has a dividend yield of 2.3 percent.What is the dividend amount?

Correct Answer
verified

Exam 7: Equity Markets and Stock Valuation

On which one of the following dates do dividends become a liability of the issuer for accounting purposes?

Correct AnswerverifiedShow Answer

The constant growth model can be used to value the stock of firms that have which type(s) of dividends?

Correct AnswerverifiedShow Answer

An agent who buys and sells securities from inventory is called a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If shareholders are granted a preemptive right they will:

Correct AnswerverifiedShow Answer

Mary owns 100 shares of stock.Each share entitles her to one vote per open seat on the board of directors.Assume there are three 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?

Correct AnswerverifiedShow Answer

Any person who owns a license to trade on the NYSE is called a:

Correct AnswerverifiedShow Answer

In November 2013, the NYSE was acquired by:

Correct AnswerverifiedShow Answer

To be a member of the NYSE, you must:

Correct AnswerverifiedShow Answer

Which one of the following will increase the current value of a stock?

Correct AnswerverifiedShow Answer

Bernard Fashionista pays a constant annual dividend of $3.75 a share and currently sells for $48.50 a share.What is the rate of return?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Spiral Staircase is offering preferred stock which is referred to as 10-10 stock.This stock will pay an annual dividend of $10 a share starting 10 years from now.What is this stock worth to you today if you require a rate of return of 9.5 percent?

Correct AnswerverifiedShow Answer

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 each share receives one vote.

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Blasco International has sales of $389,700 and costs of $413,210.The company has 120,000 shares outstanding.What is the price-sales ratio if the stock has a book value of $19.20 per share and a market value per share of $8.60?

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 dividend increases at 3.5 percent annually.What will your capital gain be in dollars on this stock if you sell it three years from now?

Correct AnswerverifiedShow Answer

The VIC Co.has preferred stock outstanding that pays a $4.50 dividend annually and sells for $48.20 per share.What is the rate of return?

Correct AnswerverifiedShow Answer

Resorts Corp.common stock is selling for $36.75 a share and has a dividend yield of 2.3 percent.What is the dividend amount?

Correct AnswerverifiedShow Answer

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