1、Chapter 07 - Equity Markets and Stock Valuation7-1Chapter 07Equity Markets and Stock ValuationMultiple Choice Questions1. What is the name given to the model that computes the present value of a stock by dividing next years annual dividend amount by the difference between the discount rate and the r
2、ate of change in the annual dividend amount? A. Stock pricing modelB. Equity pricing modelC. Capital gain modelD. Dividend growth modelE. Present value model2. The dividend yield is defined as: A. the current annual cash dividend divided by the current market price per share.B. the current annual ca
3、sh dividend divided by the current book value per share.C. next years expected cash dividend divided by the current market price per share.D. next years expected cash dividend divided by the current book value per share.E. next years expected cash dividend divided by next years expected market price
4、 per share.3. The capital gains yield equals which one of the following? A. Total yieldB. Current discount rateC. Market rate of returnD. Dividend yieldE. Dividend growth rate4. Which one of the following types of securities has no priority in a bankruptcy proceeding? A. Convertible bondB. Senior de
5、btC. Common stockD. Preferred stockE. Straight bondChapter 07 - Equity Markets and Stock Valuation7-25. Mary owns 100 shares of stock. Each share entitles her to one vote per open seat on the board of directors. Assume there are 3 open seats in the current election and Mary casts all 300 of her vote
6、s for a single candidate. What is the term used to describe this type of voting? A. ProxyB. AggregateC. CumulativeD. StraightE. Condensed6. There are two open seats on the board of directors. If two separate votes occur to elect the new directors, the firm is using a type of voting that is best desc
7、ribed as _ voting. A. simultaneousB. straightC. proxyD. cumulativeE. sequential7. Kate could not attend the last shareholders meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kates s
8、hares were voted? A. StraightB. CumulativeC. Consent-formD. ProxyE. In absentia8. Dividends are best defined as: A. cash payments to shareholders.B. cash payments to either bondholders or shareholders.C. cash or stock payments to shareholders.D. cash or stock payments to either bondholders or shareh
9、olders.E. distributions of stock to current shareholders.Chapter 07 - Equity Markets and Stock Valuation7-39. Which one of the following generally pays a fixed dividend, receives first priority in dividend payment, and maintains the right to a dividend payment, even if that payment is deferred? A. C
10、umulative commonB. Noncumulative commonC. Noncumulative preferredD. Cumulative preferredE. Senior common10. Newly issued securities are sold to investors in which one of the following markets? A. ProxyB. Stated valueC. InsideD. SecondaryE. Primary11. What is the market called that allows shareholder
11、s to resell their shares to other investors? A. PrimaryB. ProxyC. SecondaryD. InsideE. Initial12. An agent who buys and sells securities from inventory is called a: A. floor trader.B. dealer.C. commission broker.D. broker.E. floor broker.Chapter 07 - Equity Markets and Stock Valuation7-413. A broker
12、 is an agent who: A. trades on the floor of an exchange for himself or herself.B. buys and sells from inventory.C. offers new securities for sale to dealers only.D. who is ready to buy or sell at any time.E. brings buyers and sellers together.14. Any person who owns a license to trade on the NYSE is
13、 called a: A. dealer.B. floor trader.C. specialist.D. member.E. proxy.15. A person who executes customer orders to buy and sell securities on the floor of the NYSE is called a: A. floor trader.B. specialist.C. runner.D. commission broker.E. market maker.16. A specialist is a(n): A. employee who exec
14、utes orders to buy and sell for clients of his or her brokerage firm.B. individual who trades on the floor of an exchange for his or her personal account.C. NYSE member who functions as a dealer for a limited number of securities.D. broker who buys and sells securities from a market maker.E. trader
15、who only deals with primary offerings.Chapter 07 - Equity Markets and Stock Valuation7-517. An individual who executes buy and sell orders on the floor of an exchange for a fee is called a: A. floor broker.B. specialist.C. floor trader.D. proxy.E. flow specialist.18. The electronic system that trans
16、mits buy and sell orders directly to a specialist on the floor of the NYSE is called: A. NASDAQ.B. SuperDOT.C. TICKER.D. ECN.E. ORDFLOW.19. The owner of a trading license who trades on the floor of the NYSE for his or her personal account is called a(n): A. specialist.B. independent broker.C. floor
17、trader.D. stand-alone agent.E. dealer.20. The stream of customer instructions to buy and sell securities is called the: A. order flow.B. market maker.C. execution stream.D. operations flow.E. buyers stream.Chapter 07 - Equity Markets and Stock Valuation7-621. The specific location on the floor of an
18、 exchange where a particular security is traded is called a: A. box office.B. figure 6.C. specialists post.D. trading booth.E. seat.22. Inside quotes are defined as the: A. bid and asked prices presented by NYSE specialists.B. last bid and asked price offered prior to the market close.C. lowest aske
19、d and highest bid offers.D. daily opening bid and asked quotes.E. last traded bid and asked prices.23. Which one of the following is a web site that enables Lester to sell his shares of ABC stock directly to Marti? A. SuperDOTB. POSTC. ECND. SEATE. eNET24. Which one of the following will increase th
20、e current value of a stock? A. Decrease in the dividend growth rateB. Increase in the required returnC. Increase in the market rate of returnD. Decrease in the expected dividend for next yearE. Increase in the capital gains yieldChapter 07 - Equity Markets and Stock Valuation7-725. The price of a st
21、ock at year 4 can be expressed as: A. D0 / (R + G4).B. D0 (1 + R)5.C. D1 (1 + R)5.D. D4/(R-g).E. D5/(R-g).26. Delfinos expects to pay an annual dividend of $1.50 per share next year. What is the anticipated dividend for year 5 if the firm increases its dividend by 2 percent annually? A. $1.50 (1.02)
22、1B. $1.50 (1.02)2C. $1.50 (1.02)3D. $1.50 (1.02)4E. $1.50 (1.02)527. The required return on a stock is equal to which one of the following if the dividend on the stock decreases by 1 percent per year? A. (P0/D1)-gB. (D1/P0)/gC. Dividend yield + capital gains yieldD. Dividend yield - capital gains yi
23、eldE. Dividend yield capital gains yield28. Donuts Delite just paid an annual dividend of $1.10 a share. The firm expects to increase this dividend by 8 percent per year the following 3 years and then decrease the dividend growth to 2 percent annually thereafter. Which one of the following is the co
24、rrect computation of the dividend for year 7? A. ($1.10) (1.08 3) (1.02 4)B. ($1.10) (1.08 3) (1.02 3)C. ($1.10) (1.08)3 (1.02)4D. ($1.10) (1.08)3 (1.02)3E. ($1.10) (1.08)3 (1.02)2Chapter 07 - Equity Markets and Stock Valuation7-829. Aardvark, Inc. pays a constant annual dividend. At the end of trad
25、ing on Wednesday, the price of its stock was $28. At the end of trading on the following day, the stock price was $27. As a result of the decline in the stocks price, the dividend yield _ while the capital gains yield _. A. remained constant; remained constantB. increased; remained constantC. increa
26、sed; increasedD. decreased; remained constantE. decreased; decreased30. Which one of the following must equal zero if a firm pays a constant annual dividend? A. Dividend yieldB. Capital gains yieldC. Total returnD. Market value per shareE. Book value per share31. The dividend growth model can be use
27、d to value the stock of firms which pay which type of dividends? I. constant annual dividendII. annual dividend with a constant increasing rate of growthIII. annual dividend with a constant decreasing rate of growthIV. zero dividend A. I onlyB. II onlyC. II and III onlyD. I, II, and III onlyE. I, II
28、, III, and IVChapter 07 - Equity Markets and Stock Valuation7-932. Kate owns a stock with a market price of $31 per share. This stock pays a constant annual dividend of $0.60 per share. If the price of the stock suddenly increases to $36 a share, you would expect the: I. dividend yield to increase.I
29、I. dividend yield to decrease.III. capital gains yield to increase.IV. capital gains yield to decrease. A. I onlyB. II onlyC. III onlyD. I and III onlyE. II and IV only33. Computing the present value of a growing perpetuity is most similar to computing the current value of which one of the following
30、? A. Non-dividend-paying stockB. Stock with a constant dividendC. Stock with irregular dividendsD. Stock with a constant growth dividendE. Stock with growing dividends for a limited period of time34. Jensen Shipping has four open seats on its board of directors. How many shares will a shareholder ne
31、ed to control to ensure that his or her candidate is elected to the board given the fact that the firm uses straight voting? Assume one share equals one vote. A. 20 percent of the shares plus one voteB. 25 percent of the shares plus one voteC. 1/3 of the shares plus one voteD. 50 percent of the shar
32、es plus one voteE. 51 percent of the shares plus one voteChapter 07 - Equity Markets and Stock Valuation7-1035. Gleason, Inc. elects its board of directors on a staggered basis using cumulative voting. This implies that: A. if there are two open seats, then the candidate with the highest number of v
33、otes and the candidate with the lowest number of votes will be selected.B. the candidates for the open seats are voted for in individual elections.C. all open positions are filled with one round of voting, assuming there are no tie votes.D. shareholders can accumulate their votes over multiple years
34、 and cast all those votes in one election.E. the firms entire board of directors is elected annually in one combined election.36. Which one of the following statements is correct? A. From a legal perspective, preferred stock is a form of corporate equity.B. All classes of stock must have equal votin
35、g rights per share.C. Common shareholders elect the corporate directors while the preferred shareholders vote on mergers and acquisitions.D. Dividends are tax-free income for individual investors.E. Shareholders prefer noncumulative dividends over cumulative dividends.37. Which one of the following
36、statements is correct? A. Both preferred stock and corporate bonds can be callable.B. Both preferred stock and corporate bonds have a stated liquidation value of $1,000 each.C. Interest payments to bondholders as well as dividend payments to preferred shareholders are tax deductible expenses for the
37、 issuing firm.D. Bondholders generally receive a fixed payment while preferred shareholders receive a variable payment.E. Preferred shareholders receive preferential treatment over bondholders in a liquidation.38. If shareholders are granted a preemptive right they will: A. be given the choice of re
38、ceiving dividends either in cash or in additional shares of stock.B. be paid dividends prior to the preferred shareholders during the preemptive period.C. be entitled to two votes per share of stock.D. be able to choose the timing and amount of any future dividends.E. have priority in the purchase of any newly issued shares.
