Multiple choice

1.  Super Computer Company's stock is selling for $100 per share today. It is expected that this stock will pay a dividend of 6 dollars per share, and then be sold for $114 per share at the end of one year. Calculate the expected rate of return for the shareholders.  

a. 20% 

b. 15% 

c. 10% 

d. 25% 

2.  The value of a common stock today depends on:  

a. Number of shares outstanding and the number of shareholders 

b. The expected future dividends and the discount rate 

c. The Wall Street analysts 

d. Present value of the future earnings per share 

3.  CK Company stockholders expect to receive a year-end dividend of $5 per share and then be sold for $115 dollars per share. If the required rate of return for the stock is 20%, what is the current value of the stock?  

a. $100 

b. $122 

c. $132 

d. $110 

4.  Deluxe Company expects to pay a dividend of $2 per share at the end of year-1, $3 per share at the end of year -2 and then be sold for $32 per share. If the required rate on the stock is 15%, what is the current value of the stock?  

a. $28.20 

b. $32.17 

c. $32.00 

d. None of the given answers