Question 1

Another term sometimes applied to a common shareholder is a

Accepted Answer

A)  fundamental or basic owner of the firm. 
B)  residual owner of the firm. 
C)  net owner of the firm. 
D)  reciprocal owner of the firm. 
A)  fundamental or basic owner of the firm. 
B)  residual owner of the firm. 
C)  net owner of the firm. 
D)  reciprocal owner of the firm.

Question 2

An action on the part of a firm that increases the level of expected cash flows without a corresponding increase in risk should reduce share value; An action that reduces the level of expected cash flows without a corresponding decline in risk should increase share value.

Accepted Answer

A) True 
 B)False

Question 3

The investment banker does all of the following EXCEPT

Accepted Answer

A)  make long-term investments for banking institutions. 
B)  bear the risk of selling a security issue. 
C)  act as a middleman between the issuer and buyer of a new security. 
D)  advise clients. 
A)  make long-term investments for banking institutions. 
B)  bear the risk of selling a security issue. 
C)  act as a middleman between the issuer and buyer of a new security. 
D)  advise clients.

Question 4

Holders of equity have claims on both income and assets that are secondary to the claims of creditors.

Accepted Answer

A) True 
 B)False

Question 5

A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred stock has been estimated to be 16 percent. The value of the preferred stock is

Accepted Answer

A)  $64. 
B)  $16. 
C)  $25. 
D)  $50. 
A)  $64. 
B)  $16. 
C)  $25. 
D)  $50.

Question 6

The constant growth model is an approach to dividend valuation that assumes a constant future dividend.

Accepted Answer

A) True 
 B)False

Question 7

The common stock book value model ignores the firm's expected earnings potential and generally lacks any true relationship to the firm's value in the marketplace.

Accepted Answer

A) True 
 B)False

Question 8

Ted has 10 shares of the Men's Underwear Company. Based on the company's dividend policy, Ted will receive a total of $450 a year in perpetuity. What is the value of each share if the rate of interest is 8 percent?

Accepted Answer

Dividend per share =

Another term sometimes applied to a common shareholder is a

An action on the part of a firm that increases the level of expected cash flows without a corresponding increase in risk should reduce share value; An action that reduces the level of expected cash flows without a corresponding decline in risk should increase share value.

The investment banker does all of the following EXCEPT

Holders of equity have claims on both income and assets that are secondary to the claims of creditors.

A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred stock has been estimated to be 16 percent. The value of the preferred stock is

The constant growth model is an approach to dividend valuation that assumes a constant future dividend.

The common stock book value model ignores the firm's expected earnings potential and generally lacks any true relationship to the firm's value in the marketplace.

Ted has 10 shares of the Men's Underwear Company. Based on the company's dividend policy, Ted will receive a total of $450 a year in perpetuity. What is the value of each share if the rate of interest is 8 percent?

The Role of Managerial Finance

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

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Exam 7: Stock Valuation

Another term sometimes applied to a common shareholder is a

An action on the part of a firm that increases the level of expected cash flows without a corresponding increase in risk should reduce share value; An action that reduces the level of expected cash flows without a corresponding decline in risk should increase share value.

The investment banker does all of the following EXCEPT

Holders of equity have claims on both income and assets that are secondary to the claims of creditors.

A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred stock has been estimated to be 16 percent. The value of the preferred stock is

The constant growth model is an approach to dividend valuation that assumes a constant future dividend.

The common stock book value model ignores the firm's expected earnings potential and generally lacks any true relationship to the firm's value in the marketplace.

Ted has 10 shares of the Men's Underwear Company. Based on the company's dividend policy, Ted will receive a total of $450 a year in perpetuity. What is the value of each share if the rate of interest is 8 percent?

The Role of Managerial Finance

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters