Fi 515 Week6 Exam

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Grading Summary
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below.
Date Taken:
10/13/2013
Time Spent:
2 h , 49 min , 52 secs
Points Received:
52 / 100 (52%)

Question Type:
# Of Questions:
# Correct:
Multiple Choice
9
5
Essay
1
N/A

Grade Details - All Questions

1.
Question :
(TCO D) A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%. What is the current stock price?

Student Answer:

$23.11

$23.70

$24.31

$24.93

$25.57 Instructor Explanation:
Chapter 7
D0 $1.50 rs 10.1% g 4.0%
D1 = D0(1 + g) = $1.56
P0 = D1/(rs − g) $25.57

Points Received:
0 of 10 Comments:

2.
Question :
(TCO D) If D1 = $1.25, g (which is constant) = 5.5%, and P0 = $44, what is the stock’s expected total return for the coming year?

Student Answer:

7.54%

7.73%

7.93%

8.13%

8.34% Instructor Explanation:
Chapter 7
D1 $1.25 g 5.5%
P0 $44.00
Total return = rs = D1/P0 + g 8.34%

Points Received:
10 of 10 Comments:

3.
Question :
(TCO D) Molen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share. If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell?

Student Answer:

$104.27

$106.95

$109.69

$112.50

$115.38 Instructor Explanation:
Chapter 7
Preferred dividend $7.50
Required