fin 354 week8 quiz

Topics: Bond, Stock, Stock market, Interest, Cash flow, Balance sheet / Pages: 63 (15701 words) / Published: Dec 14th, 2013
FIN 534 – Homework Chapter 7

1. The preemptive right is important to shareholders because it?
Answer c. protects the current shareholders against a dilution of their ownership interests.
2. Companies can issue different classes of common stock. Which of the following statements concerning stock classes is CORRECT?

Answer d. Some class or classes of common stock are entitled to more votes per share than other classes. 3. Which of the following statements is CORRECT?

Answer e. The constant growth model takes into consideration the capital gains investors expect to earn on a stock. 4. A stock is expected to pay a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g = 5%). If the company is in equilibrium and its expected and required rate of return is 15%, which of the following statements is CORRECT?

Answer d. The company's expected stock price at the beginning of next year is $9.50.

5. If a stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock is in equilibrium.

Answer d. The stock's price one year from now is expected to be 5% above the current price.
Quiz 1

• Question 1
2 out of 2 points Which of the following statements is CORRECT?
Answer
Selected Answer:
The NYSE operates as an auction market, whereas the Nasdaq is a dealer market.
Correct Answer:
The NYSE operates as an auction market, whereas the Nasdaq is a dealer market. • Question 2
2 out of 2 points Which of the following statements is CORRECT?
Answer
Selected Answer:
One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.
Correct Answer:
One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership. • Question 3
2 out of 2 points

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