Preferred stockholders hold a claim on assets that has priority over the claims of
A. Both common stockholders and bondholders
B. Neither common stockholders nor bondholders
C. Common stockholders, but after that of bondholders
D. Bondholders, but after t
C. Common stockholders, but after that of bondholders
The riskiest capital market security is
A. Preferred stock
B. Common stock
C. Corporate bonds
D. Treasury bonds
B. Common stock
To list on the NYSE, a firm must
A. Have earnings of at least $10 million per year
B. Have at least $500 million in outstanding debt
C. Have a total of $100 million in market value
D. Meet all of the above requirements
E. Meet A and C of the above require
E. Meet A and C of the above requirements
Securities not listed on one of the exchanges trade in the over-the-counter market. In this exchange, dealers "make a market" by
A. Buying stocks for inventory
B. Selling stocks from inventory when investors want to buy
C. Doing both of the above
D. Doing
C. Doing both of the above
The most active stock exchange in the world is the
A. Nikkei Stock Exchange
B. London Stock Exchange
C. Shanghai Stock Exchange
D. New York Stock Exchange
A. Nikkei Stock Exchange
A stock currently sells for $30 per share and pays $1.00 per year in dividends. What is an investor's valuation of this stock if he expects it to be selling for $37 in one year and requires a 12 percent return on equity investments?
A. $38
B. $33.50
C. $3
D. $33.93 (one period model)
In the one-period valuation model, a stock's value will be higher
A. The higher its expected future price is
B. The lower its dividend is
C. The higher the required return on investments in equity is
D. All of the above
A. The higher its expected future price is
In the generalized dividend valuation model, a stock's value depends only on
A. Its future dividend payments and its future price
B. Its future dividend payments and the required return on equity
C. Its future price and the required return on investments
B. Its future dividend payments and the required return on equity
Which of the following is not an element of the Gordon growth model of stock valuation?
A. The stock's most recent dividend paid
B. The expected constant growth rate of dividends
C. The required return on investments in equity
D. The stock's expected futu
D. The stock's expected future price
According to the Gordon growth model, what is an investor's valuation of a stock whose current dividend is $1 per year if dividends are expected to grow at a constant rate of 10 percent over a long period of time and the investor's required return is 11 p
A. $110
Suppose the average industry P/E ratio for auto parts retailers is 20. What is the current price of Auto Zone stock if the retailer's earnings per share is projected to be $1.85?
A. $21.85
B. $37
C. $10.81
D. $9.25
B. $37
The PE Ratio approach to valuing stock is especially useful for valuing
A. Privately held firms
B. Firms that don't pay dividends
C. Both A and B of the above
D. Neither A not B of the above
C. Both A and B of the above
A weakness of the PE approach to valuing stock is that it is
A. Difficult to estimate the constant growth of a firm's dividends
B. Difficult to estimate the required return on equity
C. Difficult to predict how much a firm will pay in dividends
D. Based o
D. Based on industry averages rather than firm-specific factors
Short
Sell
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