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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) - g
B) (D1/P0) /g
C) Dividend yield + capital gains yield
D) Dividend yield - capital gains yield
E) Dividend yield × capital gains yield

F) C) and E)
G) B) and E)

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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?


A) Proxy
B) Aggregate
C) Cumulative
D) Straight
E) Condensed

F) C) and E)
G) D) and E)

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Venus,Inc.has an issue of preferred stock outstanding that pays a $9.00 dividend every year,in perpetuity.If this issue currently sells for $164.60 per share,what is the required return?


A) 5.47 percent
B) 6.89 percent
C) 7.70 percent
D) 8.23 percent
E) 8.98 percent

F) D) and E)
G) C) and D)

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If a trade is made "in the crowd," the trade has occurred:


A) between a broker and a DMM.
B) between two brokers.
C) electronically on NASDAQ.
D) on SuperDOT.
E) on an ECN.

F) B) and C)
G) A) and D)

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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.

F) D) and E)
G) A) and D)

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How are preferred stock dividends treated for tax purposes by the issuer,an individual shareholder,and a corporate shareholder?

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Dividends do not affect the taxes of the...

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For the past six years,the price of Slippery Rock stock has been increasing at a rate of 9.6 percent a year.Currently,the stock is priced at $67 a share and has a required return of 14 percent.What is the dividend yield?


A) 1.20 percent
B) 2.75 percent
C) 3.49 percent
D) 4.28 percent
E) 4.40 percent

F) A) and E)
G) A) and B)

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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 paid
B) Twelve months prior to the expected dividend payment date
C) On the declaration date
D) On the date of record
E) On the date of payment

F) A) and E)
G) A) and B)

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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 vote
B) 25 percent of the shares plus one vote
C) one-third of the shares plus one vote
D) 50 percent of the shares plus one vote
E) 51 percent of the shares plus one vote

F) B) and D)
G) C) and E)

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D

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 stock
B) Stock with a constant dividend
C) Stock with irregular dividends
D) Stock with a constant growth dividend
E) Stock with growing dividends for a limited period of time

F) C) and D)
G) None of the above

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D

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 DMM.

F) B) and D)
G) C) and E)

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Dividends are which one of the following?


A) Payable at the discretion of a firm's president
B) Treated as a tax-deductible expense to the paying firm
C) Paid out of aftertax profits
D) Paid to holders of record as of the declaration date
E) Only partially taxable to high-income individual shareholders

F) A) and D)
G) A) and E)

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After successfully completing your corporate finance class,you feel the next challenge ahead is to serve on the board of directors of Marine Enterprises.Unfortunately,you will be the only individual voting for you.If Marine Enterprises has 350,000 shares outstanding and the stock currently sells for $52,how much will it cost you to buy a seat if the company uses straight voting? Assume Marine Enterprises uses cumulative voting and there are five open seats in the current election; how much will it cost you to buy a seat now?


A) $9,100,000; $3,640,000
B) $9,100,000; $3,033,385
C) $9,100,052; $3,548,052
D) $9,100,052; $3,033,385
E) $9,100,052; $3,640,000

F) A) and E)
G) D) and E)

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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 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?


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

F) B) and D)
G) C) and D)

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A stock has a market price of $46.10 and pays a $2.40 annual dividend.What is the dividend yield?


A) 4.13 percent
B) 4.84 percent
C) 5.21 percent
D) 5.52 percent
E) 5.78 percent

F) A) and C)
G) C) and E)

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Explain how staggering offsets some of the benefits associated with cumulative voting.

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Staggering means that only a portion of ...

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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) DMM
B) Floor trader
C) $2 broker
D) Commission broker
E) Floor broker

F) A) and B)
G) A) and D)

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A firm has two open positions on its board of directors.How many shares do you need to own to guarantee your own election to the board if the firm has 12,500 shares of stock outstanding and uses cumulative voting? Each share is granted one vote.


A) 3,334 shares
B) 4,168 shares
C) 5,251 shares
D) 5,501 shares
E) 6,251 shares

F) C) and D)
G) B) and C)

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B

The capital gains yield equals which one of the following?


A) Total yield
B) Current discount rate
C) Market rate of return
D) Dividend yield
E) Dividend growth rate

F) All of the above
G) A) and B)

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Given the following partial stock quote,what is the expected annual dividend? Given the following partial stock quote,what is the expected annual dividend? A) $0.99 B) $1.08 C) $1.13 D) $1.28 E) $1.33


A) $0.99
B) $1.08
C) $1.13
D) $1.28
E) $1.33

F) B) and C)
G) All of the above

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