A) These two stocks must have the same dividend yield.
B) These two stocks should have the same expected return.
C) These two stocks must have the same expected capital gains yield.
D) These two stocks must have the same expected year-end dividend.
E) These two stocks should have the same price.
G) B) and D)
Correct Answer
verified
Correct Answer
verified
A) The two stocks could not be in equilibrium with the numbers given in the question.
B) A's expected dividend is $0.50.
C) B's expected dividend is $0.75.
D) A's expected dividend is $0.75 and B's expected dividend is $1.20.
E) The two stocks should have the same expected dividend.
G) B) and E)
Correct Answer
verified
Correct Answer
verified
A) $37.52
B) $39.40
C) $41.37
D) $43.44
E) $45.61
G) A) and C)
Correct Answer
verified
Correct Answer
verified
A) Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm's common stock, and, as a result, the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.
B) The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis) new issues of preferred stock.
C) One of the disadvantages to a corporation of owning preferred stock is that 70% of the dividends received represent taxable income to the corporate recipient, whereas interest income earned on bonds would be tax free.
D) One of the advantages to financing with preferred stock is that 70% of the dividends paid out are tax deductible to the issuer.
E) A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.
G) C) and D)
Correct Answer
verified
Correct Answer
verified
A) $2.20
B) $2.44
C) $2.69
D) $2.96
E) $3.25
G) A) and E)
Correct Answer
verified
Correct Answer
verified
A) $14.52
B) $14.89
C) $15.26
D) $15.64
E) $16.03
G) B) and D)
Correct Answer
verified
Correct Answer
verified
A) The stock's expected dividend yield and growth rate are equal.
B) The stock's expected dividend yield is 5%.
C) The stock's expected capital gains yield is 5%.
D) The stock's expected price 10 years from now is $100.00.
E) The stock's required return is 10%.
G) B) and E)
Correct Answer
verified
Correct Answer
verified
A) The company's dividend yield 5 years from now is expected to be 10%.
B) The constant growth model cannot be used because the growth rate is negative.
C) The company's expected capital gains yield is 5%.
D) The company's expected stock price at the beginning of next year is $9.50.
E) The company's current stock price is $20.
G) B) and C)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) Stock A must have a higher dividend yield than Stock B.
B) Stock B's dividend yield equals its expected dividend growth rate.
C) Stock B must have the higher required return.
D) Stock B could have the higher expected return.
E) Stock A must have a higher stock price than Stock B.
G) B) and E)
Correct Answer
verified
Correct Answer
verified
A) 4.12%
B) 4.34%
C) 4.57%
D) 4.81%
E) 5.05%
G) D) and E)
Correct Answer
verified
Correct Answer
verified
A) $1, 714, 750
B) $1, 805, 000
C) $1, 900, 000
D) $2, 000, 000
E) $2, 100, 000
G) A) and C)
Correct Answer
verified
Correct Answer
verified
A) will result in higher dividends per share.
B) is included in every corporate charter.
C) protects the current shareholders against a dilution of their ownership interests.
D) protects bondholders, and thus enables the firm to issue debt with a relatively low interest rate.
E) allows managers to buy additional shares below the current market price.
G) C) and D)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) Two firms with the same expected dividend and growth rates must also have the same stock price.
B) It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.
C) If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.
D) The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.
E) The constant growth model takes into consideration the capital gains investors expect to earn on a stock.
G) D) and E)
Correct Answer
verified
Correct Answer
verified
A) decrease.
B) fluctuate less than before.
C) fluctuate more than before.
D) possibly increase, possibly decrease, or possibly remain constant.
E) increase.
G) D) and E)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) $40.17
B) $41.20
C) $42.26
D) $43.34
E) $44.46
G) A) and C)
Correct Answer
verified
Correct Answer
verified
A) $586
B) $617
C) $648
D) $680
E) $714
G) A) and B)
Correct Answer
verified
Correct Answer
verified
A) Assume that the required return on a given stock is 13%.If the stock's dividend is growing at a constant rate of 5%, its expected dividend yield is 5% as well.
B) A stock's dividend yield can never exceed its expected growth rate.
C) A required condition for one to use the constant growth model is that the stock's expected growth rate exceeds its required rate of return.
D) Other things held constant, the higher a company's beta coefficient, the lower its required rate of return.
E) The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.
G) B) and E)
Correct Answer
verified
Correct Answer
verified
Showing 61 - 80 of 80
Related Exams