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You have agreed to pay a 5 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) DMM
B) Floor trader
C) Market maker
D) Commission broker
E) Dealer

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

Correct Answer

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The common stock of The Garden of Eden is selling for $42 a share.The company pays a constant annual dividend and has a total return of 5.8 percent.What is the amount of the dividend?


A) $1.02
B) $2.04
C) $2.44
D) $3.70
E) $6.81

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

Correct Answer

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Charles Berkeley,Inc.just paid an annual dividend of $3.60 per share on its stock.The dividends are expected to grow at a constant rate of 4.5 percent per year,indefinitely.If investors require an 11 percent return on this stock,what will the price be in 12 years?


A) $91.71
B) $93.62
C) $95.75
D) $98.15
E) $102.57

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

Correct Answer

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Business Solutions,Inc.is expected to pay its first annual dividend of $1.00 per share three years from now.Starting in year 6,the company is expected to start increasing the dividend by 2 percent per year.What is the value of this stock today at a required return of 12 percent?


A) $7.70
B) $8.09
C) $8.29
D) $9.03
E) $9.34

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

Correct Answer

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The Sports Club 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 19 percent rate of return?


A) $2.31
B) $2.36
C) $2.56
D) $2.60
E) $2.64

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

Correct Answer

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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) $2.39
B) $2.41
C) $2.46
D) $2.53
E) $2.58

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

Correct Answer

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Braxton's Cleaning 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 5 percent annually?


A) $2.71
B) $2.75
C) $2.78
D) $2.86
E) $2.93

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

Correct Answer

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New Gadgets is growing at a very fast pace.As a result,the company expects to pay annual dividends of $0.55,0.80,and $1.10 per share over the next three years,respectively.After that,the dividend is projected to increase by 5 percent annually.The last annual dividend the firm paid was $0.40 a share.What is the current value of this stock if the required return is 16 percent?


A) $8.50
B) $9.67
C) $10.46
D) $12.23
E) $12.49

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

Correct Answer

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The Waffle 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 25 percent rate of return?


A) $4.72
B) $5.00
C) $6.52
D) $6.63
E) $6.83

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

Correct Answer

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Horseshoe Stables 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 10 percent annually.What is a share of this stock worth today at a required return of 15 percent?


A) $3.06
B) $3.24
C) $3.41
D) $3.59
E) $3.95

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

Correct Answer

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Reynolds Metals common stock is selling for $25 a share and has a dividend yield of 3.1 percent.What is the dividend amount?


A) $0.31
B) $0.78
C) $3.49
D) $4.25
E) $7.80

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

Correct Answer

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Explain the difference between computing the value of a zero growth dividend-paying stock and computing the value of a constant growth dividend-paying stock.

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The dividend growth model can be used to...

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Graphic Designs has 120,000 shares of cumulative preferred stock outstanding.Preferred shareholders are supposed to be paid $1.50 per quarter per share in dividends.However,the firm has encountered financial problems and has not paid any dividends for the past three quarters.How much will the firm have to pay per share of preferred next quarter if the firm also wishes to pay a common stock dividend?


A) $3.00
B) $4.50
C) $6.00
D) $7.50
E) $9.00

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

Correct Answer

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The Chip Dip Co.has 15,500 shares of stock outstanding,grants one vote per share,and uses straight voting.How many shares must you control to guarantee that you will be elected to the firm's board of directors if there are three open seats?


A) 5,167 shares
B) 5,134 shares
C) 3,876 shares
D) 7,751 shares
E) 7,134 shares

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

Correct Answer

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Inside quotes are defined as the:


A) bid and asked prices presented by NYSE DMMs.
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.

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

Correct Answer

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Which one of the following features applies to NASDAQ but not the NYSE?


A) Trading in the crowd
B) Multiple market maker system
C) SuperDot
D) Broker market
E) Physical trading floor

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

Correct Answer

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The required return on Mountain Brook stock is 14 percent and the dividend growth rate is 5.5 percent.The stock is currently selling for $18.80 a share.What is the dividend yield?


A) 7.50 percent
B) 8.93 percent
C) 9.75 percent
D) 10.50 percent
E) 12.50 percent

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

Correct Answer

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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) simultaneous
B) straight
C) proxy
D) cumulative
E) sequential

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

Correct Answer

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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 Market
B) Over-the-Counter Bulletin Board
C) Pink sheets
D) NASDAQ Global Market
E) NYSE

F) All of the above
G) D) and E)

Correct Answer

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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) DMM.
B) independent broker.
C) floor trader.
D) stand-alone agent.
E) dealer.

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

Correct Answer

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Showing 21 - 40 of 109

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