Finance CH 7

If shareholders are granted a preemptive right they will: have priority in the purchase of any newly issued shares
Reynolds Metals common stock is selling for $25 a share and has a dividend yield of 3.1 percent. What is the dividend amount? $0.78
The NYSE: presently conducts all of its trading through SuperDOT.
Vegan Delite stock is valued at $124.20 a share. The company pays a constant annual dividend of $8.80 per share. What is the total return on this stock? 7.09 percent
A broker is an agent who: Brings buyers and sellers together
Which one of the following will increase the current value of a stock? increase in the capital gains yield
On which one of the following dates do dividends become a liability of the issuer for accounting purposes? on the declaration date
An agent who buys and sells securities from inventory is called a: dealer
An individual who executes buy and sell orders on the floor of an exchange for a fee is called a: floor broker
Shoreline Foods pays a constant annual dividend of $1.60 a share and currently sells for $28.50 a share. What is the rate of return? 5.61 percent
The dividend growth model can be used to value the stock of firms that pay which type of dividends?I. Constant annual dividendII. Annual dividend with a constant increasing rate of growthIII. Annual dividend with a constant decreasing rate of growthIV. Zero dividend I,II and III
The stream of customer instructions to buy and sell securities is called the: Order flow
Dividends are best defined as: cash or stock payments to shareholders
Which one of the following players on the floor of the NYSE is obligated to maintain a fair, orderly market for a limited number of securities? DMM
Gleason, Inc. elects its board of directors on a staggered basis using cumulative voting. This implies that: all open positions are filled with one round of voting, assuming there are no tie votes.
Venus, Inc. has an issue of preferred stock outstanding that pays a $9.00 dividend every year, in perpetuity. If this issue currently sells for $164.60 per share, what is the required return? 5.47 percent
The specific location on the floor of an exchange where a particular security is traded is called a: DMM’s post
The next dividend payment by Swenson, Inc. will be $1.80 per share. The dividends are anticipated to maintain a 5.5 percent growth rate, forever. If the stock currently sells for $48.50 per share, what is the required return? 9.21 percent
Delfino’s expects to pay an annual dividend of $1.50 per share next year. What is the anticipated dividend for year 5 if the firm increases its dividend by 2 percent annually? $1.50 × (1.02)4
Braxton’s Cleaning Company stock is selling for $32.60 a share based on a 14 percent rate of return. What is the amount of the next annual dividend if the dividends are increasing by 5 percent annually? $2.93
The required return on a stock is equal to which one of the following if the dividend on the stock decreases by 1 percent per year? dividend yield + capital gains yield
There are two open seats on the board of directors. If two separate votes occur to elect the new directors, the firm is using a type of voting that is best described as _____ voting. straight
Classic Pickles is a mature manufacturing firm. The company just paid a $4 annual dividend, but management expects to reduce the payout by 4 percent per year, indefinitely. If you require a 12 percent return on this stock, what will you pay for a share today? $24.00
Inside quotes are defined as the: lowest asked and highest bid offers
Which one of the following generally pays a fixed dividend, receives first priority in dividend payment, and maintains the right to a dividend payment, even if that payment is deferred? cumulative preffered
required return R = dividend yield + capital gains yield
constant growth model R = D / Po
constant dividend growth model Pt = Dt x (1+g) / (R-g)
preferred stock equation Pn = D(n+1) / R
dividend yield D / P
R = (D1/Po) + g
Po =D0 (1 + g) / (R – g)
Po = D1 / (R-g)

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