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1、精品文档，仅供学习与交流，如有侵权请联系网站删除CHAPTER 6Stock ValuationI.DEFINITIONSGROWING PERPETUITYa1.An asset characterized by cash flows that increase at a constant rate forever is called a:a.growing perpetuity.b.growing mon annuity.d.perpetuity due.e.preferred stock.Difficulty level: EasyDIVIDEND GROWTH MODELb2.The
2、stock valuation model that determines the current stock price by dividing the next annual dividend amount by the excess of the discount rate less the dividend growth rate is called the _ model.a.zero growthb.dividend growthc.capital pricingd.earnings capitalizatione.discounted dividendDifficulty lev
3、el: EasyDIVIDEND YIELDc3.Next years annual dividend divided by the current stock price is called the:a.yield to maturity.b.total yield.c.dividend yield.d.capital gains yield.e.earnings yield.Difficulty level: EasyCAPITAL GAINS YIELDd4.The rate at which a stocks price is expected to appreciate (or de
4、preciate) is called the _ yield.a.currentb.totalc.dividendd.capital gainse.earningsDifficulty level: EasyPREFERRED STOCKd5.A form of equity which receives preferential treatment in the payment of dividends is called _ stock.a.dual monDifficulty level: EasyPREFERRED STOCKe6.A _ is a form of equity se
5、curity that has a stated liquidating mon stocke.preferred stockDifficulty level: MediumCOMMON STOCKe7.A form of equity which receives no preferential treatment in either the payment of dividends or in bankruptcy distributions is called _ stock.a.dual monDifficulty level: EasyCUMULATIVE VOTINGb8.The
6、voting procedure whereby shareholders may cast all of their votes for one member of the board is called _ voting.a.democraticb.cumulativec.straightd.deferrede.proxyDifficulty level: EasySTRAIGHT VOTINGc9.The voting procedure where you must own 50% plus one of the outstanding shares of stock to guara
7、ntee that you will win a seat on the board of directors is called _ voting.a.democraticb.cumulativec.straightd.deferrede.proxyDifficulty level: EasyPROXY VOTINGe10.The voting procedure where a shareholder grants authority to another individual to vote his/her shares is called _ voting.a.democraticb.
8、cumulativec.straightd.deferrede.proxyDifficulty level: EasyPREEMPTIVE RIGHTSb11.Preemptive rights refer to the right of shareholders to:a.share proportionately in dividends paid.b.share proportionately in any new stock issues sold.c.share proportionately in liquidated assets.d.vote at annual shareho
9、lder meetings.e.override the votes of other shareholders.Difficulty level: MediumDIVIDENDSc12.Payments made by a corporation to its shareholders, in the form of either cash, stock or payments in kind, are called:a.retained income.c.dividends.d.redistributions.e.infused equity.Difficulty level: Easy
10、PRIMARY MARKETe13.The market in which new securities are originally sold to investors is called the _ market.a.dealerb.auctionc.over-the-counterd.secondarye.primaryDifficulty level: EasySECONDARY MARKETd14.The market in which previously issued securities are traded among investors is called the _ ma
11、rket.a.dealerb.auctionc.over-the-counterd.secondarye.primaryDifficulty level: EasyDEALERe15.An agent who buys and sells securities from inventory is called a:a.broker.b.trader.c.capitalist.d.principal.e.dealer.Difficulty level: EasyBROKERa16.An agent who arranges security transactions among investor
12、s is called a:a.broker.b.trader.c.capitalist.d.principal.e.dealer.Difficulty level: EasyNYSE MEMBERb17.The owner of a seat on the New York Stock Exchange is called a(n) _ of the exchange.a.friendb.memberc.agentd.trusteee.dealerDifficulty level: EasySPECIALISTc18.A member of the New York Stock Exchan
13、ge acting as a dealer in one or more securities on the exchange floor is called a:a.floor trader.b.floor post.c.specialist.d.floor mission broker.Difficulty level: EasyFLOOR BROKERd19.A member of the New York Stock Exchange who executes orders for commission brokers on a fee basis is a:a.floor trade
14、r.b.dealer.c.specialist.d.floor broker.e.floor agent.Difficulty level: EasyCOMMISSION BROKERe20.A member of the New York Stock Exchange who executes buy and sell orders from customers once transmitted to the exchange floor is called a:a.floor trader.b.dealer.c.specialist.d.floor mission broker.Diffi
15、culty level: EasyFLOOR TRADERa21.A member of the New York Stock Exchange who trades for his or her own account, trying to anticipate temporary price fluctuations, is called a(n):a.floor trader.b.exchange customer.c.specialist.d.floor mission broker.Difficulty level: EasySUPERDOT SYSTEMb22.The electr
16、onic system used by the New York Stock Exchange which enables orders to be transmitted directly to a specialist is called the _ system.a.NASDAQb.SuperDOTc.Instinetd.Internete.brokerage.Difficulty level: EasyORDER FLOWc23.The _ has a multiple market maker system rather than a specialist system.a.NYSE
17、.b.AMEX.c.NASDAQ.d.NIKKEI e.None of the above.Difficulty level: EasyOVER-THE-COUNTER MARKETc24.A securities market primarily comprised of dealers who buy and sell for their own inventories is generally referred to as a(n) _ market.a.auctionb.privatec.over-the-counterd. regionale.electronic networkDi
18、fficulty level: EasyECNsd25.Electronic communications networks, or ECNs, act to:a.increase liquidity.b.increase competition.c.increase the cost to invest.d.A & B.e.A & C.Difficulty level: MediumII.CONCEPTSVALUATION OF ZERO GROWTH STOCKc26.The James River Co. pays an annual dividend of $1.50 per shar
19、e on its common stock. This dividend amount has been constant for the past 15 years and is expected to remain constant. Given this, one share of James River Co. stock:a.is basically worthless as it offers no growth potential.b.has a market value equal to the present value of $1.50 paid one year from
20、 today.c.is valued as if the dividend paid is a perpetuity.d.is valued with an assumed growth rate of 3%.e.has a market value of $15.00.Difficulty level: EasyVALUATION OF ZERO GROWTH STOCKe27.The common stock of the Kenwith Co. pays a constant annual dividend. Thus, the market price of Kenwith stock
21、 will:a.also remain constant.b.increase over time.c.decrease over time.d.increase when the market rate of return increases.e.decrease when the market rate of return increases.Difficulty level: EasyDIVIDEND YIELD VS. CAPITAL GAINS YIELDc28.The Koster Co. currently pays an annual dividend of $1.00 and
22、 plans on increasing that amount by 5% each year. The Keyser Co. currently pays an annual dividend of $1.00 and plans on increasing their dividend by 3% annually. Given this, it can be stated with certainty that the _ of the Koster Co. stock is greater than the _ of the Keyser Co. stock.a.market pri
23、ce; market priceb.dividend yield; dividend yieldc.rate of capital gain; rate of capital gaind.total return; total returne.capital gains; dividend yieldDifficulty level: MediumDIVIDEND GROWTH MODELd29.The dividend growth model:I.assumes that dividends increase at a constant rate forever.II.can be use
24、d to compute a stock price at any point of time.III.states that the market price of a stock is only affected by the amount of the dividend.IV.considers capital gains but ignores the dividend yield.a.I onlyb.II onlyc.III and IV onlyd.I and II onlye.I, II, and III onlyDifficulty level: MediumDIVIDEND
25、GROWTH MODELb30.The underlying assumption of the dividend growth model is that a stock is worth:a.the same amount to every investor regardless of their desired rate of return.b.the present value of the future income which the stock generates.c.an amount computed as the next annual dividend divided b
26、y the market rate of return.d.the same amount as any other stock that pays the same current dividend and has the same required rate of return.e.an amount computed as the next annual dividend divided by the required rate of return.Difficulty level: MediumDIVIDEND GROWTH MODELc31.Assume that you are u
27、sing the dividend growth model to value stocks. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect the:a.market values of all stocks to increase, all else constant.b.market values of all stocks to remain constant as the dividend
28、 growth will offset theincrease in the market rate.c.market values of all stocks to decrease, all else constant.d.stocks that do not pay dividends to decrease in price while the dividend-paying stocks maintain a constant price.e.dividend growth rates to increase to offset this change.Difficulty leve
29、l: MediumDIFFERENTIAL GROWTHc32.Latchers Inc. is a relatively new firm that is still in a period of rapid development. The company plans on retaining all of its earnings for the next six years. Seven years from now, the company projects paying an annual dividend of $.25 a share and then increasing t
30、hat amount by 3% annually thereafter. To value this stock as of today, you would most likely determine the value of the stock _ years from today before determining todays value.a.4b.5c.6d.7e.8Difficulty level: MediumDIFFERENTIAL GROWTHd33.The Robert Phillips Co. currently pays no dividend. The compa
31、ny is anticipating dividends of $0, $0, $0, $.10, $.20, and $.30 over the next 6 years, respectively. After that, the company anticipates increasing the dividend by 4% annually. The first step in computing the value of this stock today, is to compute the value of the stock when it reaches constant g
32、rowth in year:a.3.b.4.c.5.d.6.e.7.Difficulty level: MediumDIFFERENTIAL GROWTHb34.Supernormal growth refers to a firm that increases its dividend by:a.three or more% per year.b.a rate which is most likely not sustainable over an extended period of time.c.a constant rate of 2 or more% per year.d.$.10
33、or more per year.e.an amount in excess of $.10 a year.Difficulty level: MediumDIVIDEND YIELD AND CAPITAL GAINSe35.The total rate of return earned on a stock is comprised of which two of the following?I.current yieldII.yield to maturityIII.dividend yieldIV.capital gains yielda.I and II onlyb.I and IV
34、 onlyc.II and III onlyd.II and IV onlye.III and IV onlyDifficulty level: MediumDIVIDEND YIELDc36.The total rate of return on a stock can be positive even when the price of the stock depreciates because of the:a.capital appreciation.b.interest yield.c.dividend yield.d.supernormal growth.e.real rate o
35、f return.Difficulty level: MediumDIVIDEND YIELD AND CAPITAL GAINSc37.Fred Flintlock wants to earn a total of 10% on his investments. He recently purchased shares of ABC stock at a price of $20 a share. The stock pays a $1 a year dividend. The price of ABC stock needs to _ if Fred is to achieve his 1
36、0% rate of return.a.remain constantb.decrease by 5%c.increase by 5%d.increase by 10%e.increase by 15%Difficulty level: MediumDIVIDEND GROWTH MODELd38.Which one of the following correctly defines the dividend constant growth model?a.P0 = D0 (R-g)b.D = P0 (R-g)c.R = (P0 D0) + gd.R = (D1 P0) + ge.P0 =
37、(D1 R) + gDifficulty level: MediumSHAREHOLDER RIGHTSa39.Shareholders generally have the right to:I.elect the corporate directors.II.select the senior management of the firm.III.elect the chief executive officer (CEO).IV.elect the chief operating officer (COO).a.I onlyb.I and III onlyc.II onlyd.I and
38、 II onlye.III and IV onlyDifficulty level: MediumCUMULATIVE VOTINGc40.Jack owns 35 shares of stock in Beta, Inc. and wants to exercise as much control as possible over the company. Beta, Inc. has a total of 100 shares of stock outstanding. Each share receives one vote. Presently, the company is voti
39、ng to elect two new directors. Which one of the following statements must be true given this information?a.If straight voting applies, Jack is assured one seat on the board.b.If straight voting applies, Jack can control both open seats.c.If cumulative voting applies, Jack is assured one seat on the
40、board.d.If cumulative voting applies, Jack can control both open seats.e.Regardless of the type of voting employed, Jack does not own enough shares to control any of the seats.Difficulty level: MediumSTRAIGHT VOTINGa41.ABC Co. is owned by a group of shareholders who all vote independently and who al
41、l want personal control over the firm. If straight voting is utilized, a shareholder:a.must either own enough shares to totally control the elections or else he/she has no control whatsoever.b.will be able to elect at least one director as long as there are at least three open positions and the shar
42、eholder owns at least 25% plus one of the outstanding shares.c.must own at least two-thirds of the shares, plus one, to exercise control over the elections.d.is only permitted to elect one director, regardless of the number of shares owned.e.who owns more shares than anyone else, regardless of the n
43、umber of shares owned, will control the elections.Difficulty level: MediumPROXY VOTINGe42.The Zilo Corp. has 1,000 shareholders and is preparing to elect three new board members. You do not own enough shares to control the elections but are determined to oust the current leadership. The most likely
44、result of this situation is a:a.negotiated settlement where you are granted control over one of the three open positions.b.legal battle for control of the firm based on your discontent as an individual shareholder.c.arbitrated settlement whereby you are granted control over one of the three open positions.d.total loss of power for you since you are a minority shareholder.e.proxy fight for control of the firm.Difficulty level: MediumSHAREHOLDER RIGHTSe43.Common stock