Question 1

The Toy Chest will pay an annual dividend of $2.64 per share next year and currently sells for $48.30 a share based on a market rate of return of 11.67 percent.What is the capital gains yield?

Accepted Answer

A)  7.35 percent
B)  7.78 percent
C)  9.23 percent
D)  6.20 percent
E)  4.49 percentF) B) and D)
G) B) and C)

Question 2

Opulance Corp.common stock is selling for $44.25 a share and has a dividend yield of 1.9 percent.What is the dividend amount?

Accepted Answer

A)  $..0.42
B)  $.0.84
C)  $4.20
D)  $6.20
E)  $8.40F) None of the above
G) B) and E)

Question 3

The required return on a stock is equal to which one of the following if the dividend on the stock decreases by a constant percent per year?

Accepted Answer

A)  (P0/D1)  - g
B)  (D1/P0) /g
C)  Dividend yield + Capital gains yield
D)  Dividend yield - Capital gains yield
E)  Dividend yield × Capital gains yieldF) None of the above
G) A) and B)

Question 4

Healthy Foods just paid its annual dividend of $1.62 a share.The firm recently announced that all future dividends will be increased by 2.1 percent annually.What is one share of this stock worth to you if you require a rate of return of 15.7 percent?

Accepted Answer

A)  $11.91
B)  $12.95
C)  $12.16
D)  $10.54
E)  $13.07F) B) and C)
G) A) and C)

Question 5

Which statement is true?

Accepted Answer

A)  From a legal perspective, preferred stock is a form of corporate equity.
B)  All classes of stock must have equal voting rights per share.
C)  Common shareholders elect the corporate directors while the preferred shareholders vote on mergers and acquisitions.
D)  Preferred dividends provide tax-free income to individual investors.
E)  Preferred shareholders prefer noncumulative dividends over cumulative dividends.F) C) and D)
G) A) and D)

Question 6

The dividend yield on a stock will increase if the:

Accepted Answer

A)  dividend growth rate decreases.
B)  stock price decreases.
C)  capital gains rate decreases.
D)  stock price increases.
E)  tax rate on dividends increases.F) A) and C)
G) C) and E)

Question 7

Sugar Cookies will pay an annual dividend of $1.23 a share next year.The firm expects to increase this dividend by 8 percent per year the following four years and then decrease the dividend growth to 2 percent annually thereafter.Which one of the following is the correct computation of the dividend for Year 7?

Accepted Answer

A)  ($1.23)  × (1.08 × 4)  × (1.02 × 3) 
B)  ($1.23)  × (1.08 × 4)  × (1.02 × 2) 
C)  ($1.23)  × (1.08) 4 × (1.02) 2
D)  ($1.23)  × (1.08) 4 × (1.02) 3
E)  ($1.23)  × (1.08) 4 × (1.02) 4F) A) and E)
G) None of the above

Question 8

The common stock of Zeta Group sells for $42 per share, has a rate of return of 12.2 percent, and a dividend growth rate of 1.8 percent annually.What was the amount of the last annual dividend paid?

Accepted Answer

A)  $3.82
B)  $3.85
C)  $4.29
D)  $4.57
E)  $4.35F) A) and D)
G) A) and C)

Exam 7: Equity Markets and Stock Valuation

Healthy Foods just paid its annual dividend of $1.62 a share.The firm recently announced that all future dividends will be increased by 2.1 percent annually.What is one share of this stock worth to you if you require a rate of return of 15.7 percent?

Correct Answer
verified

Opulance Corp.common stock is selling for $44.25 a share and has a dividend yield of 1.9 percent.What is the dividend amount?

Correct Answer
verified

The common stock of Zeta Group sells for $42 per share, has a rate of return of 12.2 percent, and a dividend growth rate of 1.8 percent annually.What was the amount of the last annual dividend paid?

Correct Answer
verified

Correct Answer
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Which statement is true?

Correct Answer
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The Toy Chest will pay an annual dividend of $2.64 per share next year and currently sells for $48.30 a share based on a market rate of return of 11.67 percent.What is the capital gains yield?

Correct Answer
verified

The required return on a stock is equal to which one of the following if the dividend on the stock decreases by a constant percent per year?

Correct Answer
verified

The dividend yield on a stock will increase if the:

Correct Answer
verified

Exam 7: Equity Markets and Stock Valuation

Healthy Foods just paid its annual dividend of $1.62 a share.The firm recently announced that all future dividends will be increased by 2.1 percent annually.What is one share of this stock worth to you if you require a rate of return of 15.7 percent?

Correct AnswerverifiedShow Answer

Opulance Corp.common stock is selling for $44.25 a share and has a dividend yield of 1.9 percent.What is the dividend amount?

Correct AnswerverifiedShow Answer

The common stock of Zeta Group sells for $42 per share, has a rate of return of 12.2 percent, and a dividend growth rate of 1.8 percent annually.What was the amount of the last annual dividend paid?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

The Toy Chest will pay an annual dividend of $2.64 per share next year and currently sells for $48.30 a share based on a market rate of return of 11.67 percent.What is the capital gains yield?

Correct AnswerverifiedShow Answer

The required return on a stock is equal to which one of the following if the dividend on the stock decreases by a constant percent per year?

Correct AnswerverifiedShow Answer

The dividend yield on a stock will increase if the:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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