Question 1

When reviewing a stock's price measured to other stocks, you are assessing a stock's:

Accepted Answer

A)  price/earnings (P/
E)  ratio 
B)  relative value 
C)  value stocks 
D)  none of the above. 
A)  price/earnings (P/
E)  ratio 
B)  relative value 
C)  value stocks 
D)  none of the above.

Question 2

Annual dividends of Pfizer, Inc. (PFE) grew from $0.38 in 2000 to $1.15 in 2007. What was the annual growth rate?

Accepted Answer

A)  2.02 percent 
B)  17.14 percent 
C)  28.95 percent 
D)  202.63 percent 
A)  2.02 percent 
B)  17.14 percent 
C)  28.95 percent 
D)  202.63 percent

Question 3

Stock valuation model dynamics make clear that higher growth rates lead to

Accepted Answer

A)  lower valuations. 
B)  higher valuations. 
C)  lower growth rates continuing. 
D)  higher growth rates continuing. 
A)  lower valuations. 
B)  higher valuations. 
C)  lower growth rates continuing. 
D)  higher growth rates continuing.

Question 4

We can estimate a stock's value by

Accepted Answer

A)  using the book value of the total stockholder equity section. 
B)  discounting the future dividends and future stock price appreciation. 
C)  compounding the past dividends and past stock price appreciation. 
D)  using the book value of the total assets divided by the number of shares outstanding. 
A)  using the book value of the total stockholder equity section. 
B)  discounting the future dividends and future stock price appreciation. 
C)  compounding the past dividends and past stock price appreciation. 
D)  using the book value of the total assets divided by the number of shares outstanding.

Question 5

If on November 26, 2017, The Dow Jones Industrial Average closed at 12,743.40, which was down 237.44 that day. What was the return (in percent) of the stock market that day?

Accepted Answer

A)  −0.02 percent 
B)  +0.02 percent 
C)  −1.83 percent 
D)  +1.83 percent 
A)  −0.02 percent 
B)  +0.02 percent 
C)  −1.83 percent 
D)  +1.83 percent

Question 6

American Eagle Outfitters (AEO) recently paid a $0.38 dividend. The dividend is expected to grow at a 15.5 percent rate. At the current stock price of $24.07, what is the return shareholders are expecting?

Accepted Answer

A)  15.50 percent 
B)  15.52 percent 
C)  17.08 percent 
D)  17.32 percent 
A)  15.50 percent 
B)  15.52 percent 
C)  17.08 percent 
D)  17.32 percent

Question 7

A firm's recent dividend was $4.00 per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12 percent on this stock, what is this stock's growth rate?

Accepted Answer

A)  4.73 percent 
B)  4.41 percent 
C)  5.91 percent 
D)  6.14 percent 
A)  4.73 percent 
B)  4.41 percent 
C)  5.91 percent 
D)  6.14 percent

Question 8

The Standard & Poor's 500 Index includes

Accepted Answer

A)  all of the stock listed on the New York Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine. 
A)  all of the stock listed on the New York Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine.

Question 9

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

Accepted Answer

A)  $89,250,000,000 
B)  $89,250,000 
C)  $892,500,000 
D)  $892,500 
A)  $89,250,000,000 
B)  $89,250,000 
C)  $892,500,000 
D)  $892,500

Question 10

A stock is expected to pay a $4.00 dividend per share. The growth rate is expected to be 5 percent. If investors demand 10 percent on this stock, what is the expected price of the stock 10 years from now?

Accepted Answer

A)  $94.68 
B)  $92.17 
C)  $130.31 
D)  $126.93 
A)  $94.68 
B)  $92.17 
C)  $130.31 
D)  $126.93

Question 11

The NASDAQ Composite includes

Accepted Answer

A)  all of the stocks listed on the NASDAQ Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine. 
A)  all of the stocks listed on the NASDAQ Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine.

Question 12

The Dow Jones Industrial Average (DJIA) includes

Accepted Answer

A)  all of the stock listed on the New York Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine. 
A)  all of the stock listed on the New York Stock Exchange. 
B)  30 of the largest (market capitalization) and most active companies in the U.S. economy. 
C)  500 firms that are the largest in their respective economic sectors. 
D)  500 firms that are the largest as ranked by Fortune Magazine.

Question 13

Which of the following statements is incorrect?

Accepted Answer

A)  Preferred stock prices fluctuate with market interest rates and behave like corporate bond prices. 
B)  Common stock prices changes with the value of the company's underlying business. 
C)  Preferred stockholders have higher precedence for repayment than common stock in the event of firm liquidation from bankruptcy. 
D)  All of these choices are correct. 
A)  Preferred stock prices fluctuate with market interest rates and behave like corporate bond prices. 
B)  Common stock prices changes with the value of the company's underlying business. 
C)  Preferred stockholders have higher precedence for repayment than common stock in the event of firm liquidation from bankruptcy. 
D)  All of these choices are correct.

Question 14

JUJU's dividend next year is expected to be $1.50. It is trading at $45 and is expected to grow at 9 percent per year. What is JUJU's dividend yield and capital gain?

Accepted Answer

A)  1.5 percent; 6 percent 
B)  9 percent; 3.33 percent 
C)  3.33 percent; 9 percent 
D)  6 percent; 1.5 percent 
A)  1.5 percent; 6 percent 
B)  9 percent; 3.33 percent 
C)  3.33 percent; 9 percent 
D)  6 percent; 1.5 percent

Question 15

Suppose that a firm's recent earnings per share and dividends per share are $2.50 and $1.00, respectively. Both are expected to grow at 10 percent. However, the firm's current P/E ratio of 22 seems high for this growth rate. The P/E ratio is expected to fall to 18 within five years. Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years. Then discount these cash flows using a 14 percent required rate.

Accepted Answer

A)  $37.51 
B)  $37.64 
C)  $42.14 
D)  $72.47 
A)  $37.51 
B)  $37.64 
C)  $42.14 
D)  $72.47

Question 16

You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are $27.22 and $27.25, respectively. You place a limit sell-order at $27.24. If the trade executes, how much money do you receive from the buyer?

Accepted Answer

A)  $2,722.00 
B)  $2,724.00 
C)  $2,725.00 
D)  $5,446.00 
A)  $2,722.00 
B)  $2,724.00 
C)  $2,725.00 
D)  $5,446.00

Question 17

ABC has a net profit margin of 3.3 percent on sales of $10,000,000. The firm has 50,000 shares outstanding. If the firm's P/E is 19 times, how much is the stock selling for?

Accepted Answer

A)  $41.72 
B)  $34.96 
C)  $125.40 
D)  $99.16 
A)  $41.72 
B)  $34.96 
C)  $125.40 
D)  $99.16

Question 18

Which of the following will only be executed if the order's price conditions are met?

Accepted Answer

A)  a trade 
B)  a limit order 
C)  an unlimited order 
D)  a spread 
A)  a trade 
B)  a limit order 
C)  an unlimited order 
D)  a spread

Question 19

A firm's recent dividend was $2.00 per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10 percent on this stock, what is this stock's growth rate?

Accepted Answer

A)  4.73 percent 
B)  5.92 percent 
C)  6.00 percent 
D)  5.77 percent 
A)  4.73 percent 
B)  5.92 percent 
C)  6.00 percent 
D)  5.77 percent

Question 20

Sally has researched GLE and wants to pay no more than $50 for the stock. Currently, GLE is trading in the market for $54. Sally would be best served to

Accepted Answer

A)  buy using a limit order. 
B)  buy using a market order. 
C)  use the bid-ask spread to her advantage. 
D)  None of the options. 
A)  buy using a limit order. 
B)  buy using a market order. 
C)  use the bid-ask spread to her advantage. 
D)  None of the options.

When reviewing a stock's price measured to other stocks, you are assessing a stock's:

Annual dividends of Pfizer, Inc. (PFE) grew from $0.38 in 2000 to $1.15 in 2007. What was the annual growth rate?

Stock valuation model dynamics make clear that higher growth rates lead to

We can estimate a stock's value by

If on November 26, 2017, The Dow Jones Industrial Average closed at 12,743.40, which was down 237.44 that day. What was the return (in percent) of the stock market that day?

American Eagle Outfitters (AEO) recently paid a $0.38 dividend. The dividend is expected to grow at a 15.5 percent rate. At the current stock price of $24.07, what is the return shareholders are expecting?

A firm's recent dividend was $4.00 per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12 percent on this stock, what is this stock's growth rate?

The Standard & Poor's 500 Index includes

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

A stock is expected to pay a $4.00 dividend per share. The growth rate is expected to be 5 percent. If investors demand 10 percent on this stock, what is the expected price of the stock 10 years from now?

The NASDAQ Composite includes

The Dow Jones Industrial Average (DJIA) includes

Which of the following statements is incorrect?

JUJU's dividend next year is expected to be $1.50. It is trading at $45 and is expected to grow at 9 percent per year. What is JUJU's dividend yield and capital gain?

You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are $27.22 and $27.25, respectively. You place a limit sell-order at $27.24. If the trade executes, how much money do you receive from the buyer?

ABC has a net profit margin of 3.3 percent on sales of $10,000,000. The firm has 50,000 shares outstanding. If the firm's P/E is 19 times, how much is the stock selling for?

Which of the following will only be executed if the order's price conditions are met?

A firm's recent dividend was $2.00 per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10 percent on this stock, what is this stock's growth rate?

Sally has researched GLE and wants to pay no more than $50 for the stock. Currently, GLE is trading in the market for $54. Sally would be best served to

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 8: Valuing Stocks

When reviewing a stock's price measured to other stocks, you are assessing a stock's:

Annual dividends of Pfizer, Inc. (PFE) grew from $0.38 in 2000 to $1.15 in 2007. What was the annual growth rate?

Stock valuation model dynamics make clear that higher growth rates lead to

We can estimate a stock's value by

If on November 26, 2017, The Dow Jones Industrial Average closed at 12,743.40, which was down 237.44 that day. What was the return (in percent) of the stock market that day?

American Eagle Outfitters (AEO) recently paid a $0.38 dividend. The dividend is expected to grow at a 15.5 percent rate. At the current stock price of $24.07, what is the return shareholders are expecting?

A firm's recent dividend was $4.00 per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12 percent on this stock, what is this stock's growth rate?

The Standard & Poor's 500 Index includes

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

A stock is expected to pay a $4.00 dividend per share. The growth rate is expected to be 5 percent. If investors demand 10 percent on this stock, what is the expected price of the stock 10 years from now?

The NASDAQ Composite includes

The Dow Jones Industrial Average (DJIA) includes

Which of the following statements is incorrect?

JUJU's dividend next year is expected to be $1.50. It is trading at $45 and is expected to grow at 9 percent per year. What is JUJU's dividend yield and capital gain?

You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are $27.22 and $27.25, respectively. You place a limit sell-order at $27.24. If the trade executes, how much money do you receive from the buyer?

ABC has a net profit margin of 3.3 percent on sales of $10,000,000. The firm has 50,000 shares outstanding. If the firm's P/E is 19 times, how much is the stock selling for?

Which of the following will only be executed if the order's price conditions are met?

A firm's recent dividend was $2.00 per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10 percent on this stock, what is this stock's growth rate?

Sally has researched GLE and wants to pay no more than $50 for the stock. Currently, GLE is trading in the market for $54. Sally would be best served to

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters