A) The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
B) The corporate valuation model discounts free cash flows by the required return on equity.
C) The corporate valuation model can be used to find the value of a division.
D) An important step in applying the corporate valuation model is forecasting the firm's pro forma financial statements.
E) Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon,or continuing,value.
G) A) and B)
Correct Answer
verified
Correct Answer
verified
A) $1,876
B) $1,763
C) $1,744
D) $2,251
E) $2,063
G) C) and E)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) allows managers to buy additional shares below the current market price.
B) will result in higher dividends per share.
C) is included in every corporate charter.
D) protects the current shareholders against a dilution of their ownership interests.
E) protects bondholders and thus enables the firm to issue debt with a relatively low interest rate.
G) C) and D)
Correct Answer
verified
Correct Answer
verified
A) $2,260
B) $2,452
C) $2,345
D) $1,876
E) $2,132
G) D) and E)
Correct Answer
verified
Correct Answer
verified
A) $11.87
B) $11.28
C) $13.65
D) $13.30
E) $12.23
G) A) and C)
Correct Answer
verified
Correct Answer
verified
A) The stock's dividend yield is 7%.
B) The stock's dividend yield is 8%.
C) The current dividend per share is $4.00.
D) The stock price is expected to be $54 a share one year from now.
E) The stock price is expected to be $57 a share one year from now.
G) A) and D)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) $32.14
B) $34.32
C) $27.14
D) $36.19
E) $31.20
G) B) and D)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) expected future return must be less than the most recent past realized return.
B) past realized return must be equal to the expected return during the same period.
C) required return must equal the realized return in all periods.
D) expected return must be equal to both the required future return and the past realized return.
E) expected future return must be equal to the required return.
G) All of the above
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) increase.
B) decrease.
C) fluctuate less than before.
D) fluctuate more than before.
E) possibly increase,possibly decrease,or possibly remain constant.
G) A) and C)
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
B) False
Correct Answer
verified
Correct Answer
verified
A) $10.08
B) $11.72
C) $13.83
D) $12.66
E) $13.60
G) A) and B)
Correct Answer
verified
Correct Answer
verified
A) $33.35
B) $44.73
C) $40.67
D) $39.04
E) $44.33
G) B) and E)
Correct Answer
verified
Correct Answer
verified
A) The two stocks must have the same dividend per share.
B) If one stock has a higher dividend yield,then it must also have a lower dividend growth rate.
C) If one stock has a higher dividend yield,then it must also have a higher dividend growth rate.
D) The two stocks must have the same dividend growth rate.
E) The two stocks must have the same dividend yield.
G) B) and D)
Correct Answer
verified
Correct Answer
verified
A) A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.
B) Preferred stock is normally expected to provide steadier,more reliable income to investors than the same firm's common stock.As a result,the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.
C) 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.
D) One of the disadvantages to a corporation of owning preferred stock is that 50% of the dividends received represent taxable income to the corporate recipient,whereas interest income earned on bonds is tax free.
E) One of the advantages to financing with preferred stock is that 50% of the dividends paid out are tax deductible to the issuer.
G) D) and E)
Correct Answer
verified
Correct Answer
verified
A) To implement the corporate valuation model,we discount projected free cash flows at the weighted average cost of capital.
B) To implement the corporate valuation model,we discount net operating profit after taxes (NOPAT) at the weighted average cost of capital.
C) To implement the corporate valuation model,we discount projected net income at the weighted average cost of capital.
D) To implement the corporate valuation model,we discount projected free cash flows at the cost of equity capital.
E) The corporate valuation model requires the assumption of a constant growth rate in all years.
G) C) and D)
Correct Answer
verified
Correct Answer
verified
Showing 61 - 80 of 89
Related Exams