7L for Shahimermaid finance
blakli
7l_f.docxQuestion 1
1.
A firm may use a stock repurchase for all of the following reasons except
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a. to dispose of excess cash |
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b. to increase retained earnings |
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c. as part of a financial restructuring |
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d. to reduce takeover risk |
0.4 points
Question 2
1.
The P/E ratio indicates
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a. how much investors are willing to pay for $1 of current earnings |
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b. the current yield |
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c. the current price |
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d. how risky the stock is |
0.4 points
Question 3
1.
A procedure that allows a firm to file a master registration statement with the SEC and then sell an offering of common stock in small increments is known as ____.
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a. A Green Shoe option |
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b. an IPO |
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c. rule 215 |
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d. a shelf registration |
0.4 points
Question 4
1.
The book value of an asset represents
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a. the market value |
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b. the discounted cash flow value |
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c. the historic acquisition cost of the asset |
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d. stockholders' acquisition value |
0.4 points
Question 5
1.
The returns investors receive from holding common stocks may be in two forms. They are
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a. cash dividend payments and capital gains |
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b. future earnings and treasury stock |
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c. stock splits and stock dividends |
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d. cash dividends and stock dividends |
0.4 points
Question 6
1.
What is the value of a share of stock of HOV Inc. to an investor who requires a 12 percent rate of return if HOV's current dividend is $1.20? Assume earnings and dividends are expected to grow at a compound annual rate of 7 percent.
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a. $24.00 |
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b. $18.34 |
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c. $25.68 |
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d. $19.62 |
0.4 points
Question 7
1.
The rights of stockholders to share equally on a per share basis in any distributions of corporate earnings is known as ____.
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a. preemptive rights |
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b. voting rights |
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c. asset rights |
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d. dividend rights |
0.4 points
Question 8
1.
When evaluating a firm based on price/earnings multiples, the evaluator must determine the price/earnings multiple for
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a. the general market |
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b. the S&P 500 |
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c. firms in the same industry |
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d. small capitalization firms |
0.4 points
Question 9
1.
Which of the following is not a characteristic of common stock:
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a. has no maturity date |
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b. considered a permanent form of long-term financing |
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c. has claims on assets prior to those of preferred stock |
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d. is a residual form of ownership |
0.4 points
Question 10
1.
High Brow Cow Farms, producers of the finest dairy products, has common stock that sells for $54. Dividends are expected to continue to grow at a rate of 8% annually. If investors in High Brow require a 13% rate of return, what is the current dividend?
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a. $2.70 |
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b. $2.50 |
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c. $4.00 |
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d. $3.25 |
0.4 points
Question 11
1.
If competition in an industry increases, the future growth potential should
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a. decrease |
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b. increase |
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c. not be affected |
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d. be negative |
0.4 points
Question 12
1.
The market value of common stock is primarily based on
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a. the firm's future earnings |
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b. book value |
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c. total assets |
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d. retained earnings |
0.4 points
Question 13
1.
The current price of Zebar is $32.00 and the current dividend is $.60. What is an investor's required rate of return on Zebar if dividends are expected to grow perpetually at a compound annual rate of 8 percent?
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a. 9.88% |
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b. 11.38% |
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c. 18.75% |
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d. 10.03% |
0.4 points
Question 14
1.
Common stockholders have a number of general rights, including all of the following except:
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a. voting rights |
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b. management rights |
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c. asset rights |
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d. dividend rights |
0.4 points
Question 15
1.
If the general level of interest rates in the economy moves up, then investors will require a ____ rate of return on securities, and, in general, stock prices should ____, ceteris paribus.
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a. lower, decline |
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b. higher, increase |
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c. higher, decline |
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d. lower, increase |
