Test bank về Stock và Equity market dành cho sinh viên chuyên ngành tài chính và kinh doanh quốc tế. Test bank bao gồm đáp án chi tiết giúp sinh viên dễ giành ôn tập và rèn luyện để chuẩn bị tốt hơn cho các kỳ thi.
CHAPTER STOCK AND EQUITY MARKET The stock valuation model that determines the current stock price as the next dividend divided by the (discount rate less the dividend growth rate) is called the: A) Zero growth model B) Dividend growth model C) Capital Asset Pricing Model D) Earnings capitalization model Answer: B A stock's next expected dividend divided by the current stock price is the: A) Current yield B) Total yield C) Dividend yield D) Capital gains yield E) Earnings yield Answer: C The rate at which the stock price is expected to appreciate (or depreciate) is the: A) Current yield B) Total yield C) Dividend yield D) Capital gains yield E) Earnings yield Answer: D Payments made by a corporation to its shareholders, in the form of either cash, stock, or payments in kind, are called: A) Retained earnings B) Net income C) Dividends D) Redistributions E) Infused equity Answer: C The market in which new securities are originally sold to investors is the market A) dealer B) auction C) over-the-counter (OTC) D) secondary E) primary Answer: E The market in which previously issued securities are traded among investors is the: A) Dealer market B) Auction market C) Over-the-counter (OTC) market D) Secondary market E) Primary market Answer: D Common stock valuation requires, among other things, information regarding the: I Expected dividend growth rate II Current dividend payment III Par value of the common stock A) I only B) I and II only C) I and III only D) II and III only E) I, II, and III Answer: B As illustrated using the dividend growth model, the total return on a share of common stock is comprised of a _ A) capital gains yield and a dividend growth rate B) capital gains growth rate and a dividend growth rate C) dividend payout ratio and a required rate of return D) dividend yield and the present dividend E) dividend yield and a capital gains yield Answer: E Which of the following items would usually appear for a stock quote in The Wall Street Journal? A) Capital gains rate B) Dividend yield C) Number of shares outstanding D) Par value of the stock E) Dividend growth rate Answer: B 10 If dividends on a common stock are expected to grow at a constant rate forever, and if you are told the most recent dividend paid, the dividend growth rate, and the appropriate discount rate today, you can calculate _ I the price of the stock today II the dividend that is expected to be paid ten years from now III the appropriate discount rate ten years from now A) I only B) I and II only C) I and III only D) II and III only E) I, II, and III Answer: B 11 Which of the following statements regarding dividend yields is true? A) It measures how much the stock's price will increase in a year B) It incorporates the par value of the stock into the calculation C) It is analogous to the current yield for a bond D) It is always greater than the stock's capital gains yield E) It measures the total annual return an investor can expect to earn by owning the stock Answer: C 12 Which of the following is (are) true? I The dividend yield on a stock is the annual dividend divided by the par value II When the constant dividend growth model holds, g = capital gains yield III The total return on a share of stock = dividend yield + capital gains yield A) I only B) II only C) I and II only D) II and III only E) I, II, and III Answer: D 13 If some shareholders have greater voting power than others, it must be that: A) The company has both preferred stock and common stock outstanding B) The company has outstanding debentures C) The company is located outside the United States in a tax-haven locale D) The company has multiple classes of common stock E) The company is in bankruptcy proceedings Answer: D 14 What would you pay for a share of ABC Corporation stock today if the next dividend will be $3 per share, your required return on equity investments is 15%, and the stock is expected to be worth $90 one year from now? A) $78.26 B) $80.87 C) $82.56 D) $90.00 E) $98.12 Answer: B Response: P0 = $3 / 1.15 + 90 / 1.15 = $80.87 15 The dividend on Simple Motors common stock will be $3 in year, $4.25 in years, and $6.00 in years You can sell the stock for $100 in years If you require a 12% return on your investment, how much would you be willing to pay for a share of this stock today? A) $75.45 B) $77.24 C) $81.52 D) $85.66 E) $91.30 Answer: C Response: P0 = $3.00 / 1.12 + 4.25 / 1.122 + 106 / 1.123 = $81.52 Or use your CF keystrokes: Thusly: CF0, 2nd, CLR WORK, CF0, 0, Enter, ↓, CO1, 3, Enter, ↓, FO1, 1, Enter, ↓, CO2, 4.25, Enter, ↓, FO2, 1, Enter, ↓, CO3, 106, Enter, ↓, FO3, 1, Enter, ↓, CO4, NPV, I, 12, Enter, ↓, NPV, CPT, NPV = 81.52 16 A stock that pays a constant dividend of $1.50 forever currently sells for $10.71 What is the required rate of return? A) 10% B) 12% C) 13% D) 14% E) 15% Answer: D Response: $10.71 = $1.50 / R; R = 14% 17 ABC Company's preferred stock is selling for $30 a share If the required return is 8%, what will the dividend be two years from now? A) $2.00 B) $2.20 C) $2.40 D) $2.80 E) $3.25 Answer: C Response: $30 = D / 08; D = $2.40 18 What would you pay today for a stock that is expected to make a $2 dividend in one year if the expected dividend growth rate is 5% and you require a 12% return on your investment? A) $28.57 B) $29.33 C) $31.43 D) $43.14 E) $54.30 Answer: A Response: P0 = $2 / (.12 - 05) = $28.57 19 The stock of MTY Golf World currently sells for $90 per share The firm has a constant dividend growth rate of 6% and just paid a dividend of $5.09 If the required rate of return is 12%, what will the stock sell for one year from now? A) $ 90.00 B) $ 93.52 C) $ 95.40 D) $ 99.80 E) $112.78 Answer: C Response: P1 = P0(1 + g) = $90 (1.06) = $95.40 20 Llano's stock is currently selling for $40.00 The expected dividend one year from now is $2 and the required return is 13% What is this firm's dividend growth rate assuming the constant dividend growth model is appropriate? A) 8% B) 9% C) 10% D) 11% Answer: A Response: g = 13 - ($2 / 40) = 8% 21 The current price of XYZ stock is $80.00 Dividends are expected to grow at 5% indefinitely and the most recent dividend was $2.75 What is the required rate of return on XYZ stock? A) 7.3% B) 8.7% C) 9.5% D) 10.6% E) 11.2% Answer: B R = D1/Po + g = Do(1+g)/Po + g = [2.75(1.05)]/80 + 05 Response: R = ($2.89 / 80) + 05 = 8.7% 22 ABC Corporation's common stock dividend yield is 3.61%, it just paid a dividend of $2.75, and is expected to pay a dividend of $2.89 one year from now Dividends are expected to grow at a constant rate indefinitely What is the required rate of return on ABC stock? A) 7.3% B) 8.7% C) 9.5% D) 10.6% E) 11.2% Answer: B Response: ($2.89 - 2.75) / 2.75 = 051; R = 036 + 051 = 8.7% 23 If Big Amp, Inc stock closed at $36 and the current quarterly dividend is $0.75 per share, what dividend yield would be reported for the stock in The Wall Street Journal? A) 2.0% B) 3.6% C) 5.7% D) 6.6% E) 8.3% Answer: E Response: DY = ($0.75 x 4) / 36 = 8.3% 24 Suppose NoGro, Inc has just issued a dividend of $3.25 per share Subsequent dividends will remain at $3.25 indefinitely Returns on the stock of firms like NoGro are currently running 10% What is the value of one share of stock? A) $22.50 B) $27.25 C) $32.50 D) $37.25 E) $39.75 Answer: C Response: P0 = $3.25 / 10 = $32.50 25 Suppose Pale Hose, Inc has just paid a dividend of $1.80 per share Sales and profits for Pale Hose are expected to grow at a rate of 8% per year Its dividend is expected to grow by the same amount If the required return is 14%, what is the value of a share of Pale Hose? A) $18.00 B) $25.20 C) $27.80 D) $30.60 E) $32.40 Answer: E Response: P0 = [$1.80(1.08)] / (.14 - 08) = $32.40 26 Suppose that you have just purchased a share of stock for $40 The most recent dividend was $2 and dividends are expected to grow at a rate of 7% indefinitely What must your required return be on the stock? A) 5.45% B) 7.00% C) 10.25% D) 12.35% E) 13.65% Answer: D Response: R = [$2(1.07)] / 40 + 07 = 12.35% 27 The preferred stock of the Limbaugh Institute pays a constant annual dividend of $4 and sells for $50 You believe the stock will sell for $32 in one year You must, therefore, believe that the required return on the stock will be _ percentage points in one year A) 8; higher B) 8; lower C) 1.5; higher D) 2.5; lower E) 4.5; higher Answer: E Response: current yield is just 4/50 or 08 or R = 8%; next year? The yield will be 4/32 or 12.5% The yield in one year is 4.5% lower (.08 - 125 = -.045) 28 A firm's stock has a required return of 12% The stock's dividend yield is 5% What is the dividend the firm is expected to pay in one year if the current stock price is $50? A) $2.00 B) $2.50 C) $3.00 D) $3.50 E) $4.00 Answer: B Response: D1 = $50 (.05) = $2.50 29 A firm's stock has a required return of 12% The stock's dividend yield is 5% What dividend did the firm just pay if the current stock price is $50? A) $2.18 B) $2.34 C) $2.50 D) $2.87 E) $3.60 Answer: B Response: D0=D1/(1 + g); R = D1/P0 + g .12 = 05 + g … g must be 07 D1 = P0(Dividend Yld) D1 = 50(.05) = 2.50 The most recent dividend equals the next dividend backed up one period, or the next dividend divided by (1 + g)… or….D0=2.50/(1 + 07) = 2.5/1.07 = 2.34 Use the following to answer questions 30-36: 52 Weeks Hi Lo 48.72 20.10 Stock Duke Energy Sym DUK Div 1.00 Yld % 3.3 PE 18 Vol 100s 20925 Hi 31.55 Lo 29.40 Close 30.20 30 Duke stock must have closed at _ per share on the previous trading day A) $29.64 B) $30.76 C) $30.99 D) $31.55 E) $32.11 Answer: B Response: 30.76 - 0.56 = 30.20 31 For the current year, the expected dividend per share is: A) $0.25 Chg –.56 B) $1.00 C) $2.00 D) $3.30 E) $4.00 Answer: B Doing the algebra? Expected DPS = Yld x Close = 033 x 30.20 = 32 Assume the expected growth rate in dividends is 10% Then the constant growth model suggests that the required return on Duke stock is: A) 7.4% B) 8.9% C) 11.0% D) 13.6% E) 15.8% Answer: D Response: R = [($1.00 x 1.10) / 30.20] + 10 = 13.6% 33 Based on the quote, a good estimate of EPS over the last four quarters is: A) $0.80 B) $1.21 C) $1.68 D) $1.91 E) $2.54 Answer: C Response: EPS = $30.20 / 18 = $1.68 34 On this trading day, the number of Duke shares which changed hands was: A) 209 B) 2,092 C) 20,925 D) 209,250 E) 2,092,500 Answer: E The algebra? How about 20,925 x 100 = 2,092,500 35 Assume that Duke paid a $0.92 annual dividend in the previous period What is the dividend growth rate based on this quote? A) 4.8% B) 6.0% C) 7.2% D) 8.7% E) 9.9% Answer: D : Response: g = ($1.00 / 0.92) - = 8.7% 36 You believe that the required return on Duke stock is 16% and that the expected dividend growth rate is 12%, which is expected to remain constant for the foreseeable future Is the stock currently overvalued, undervalued, or fairly priced? A) Overvalued B) Undervalued C) Fairly priced D) Cannot tell without more information Answer: A Response: P0 = [$1.00 (1.12) ] / (.16 - 12) = $28.00; overvalued at $30.20 in the market ... dividend payment III Par value of the common stock A) I only B) I and II only C) I and III only D) II and III only E) I, II, and III Answer: B As illustrated using the dividend growth model,... capital gains yield and a dividend growth rate B) capital gains growth rate and a dividend growth rate C) dividend payout ratio and a required rate of return D) dividend yield and the present dividend... III the appropriate discount rate ten years from now A) I only B) I and II only C) I and III only D) II and III only E) I, II, and III Answer: B 11 Which of the following statements regarding dividend