Chapter 7 - SmartBook

The value of a firm is derived using the firm's ______ rate and its ______ rate. discount; burn growth; inflation growth; discount

c

Using a benchmark PE ratio against current earnings yields a forecasted price called a ______ price. expected benchmark future target

d

"Inside quotes" represent the ______ and the ______. highest bid price; lowest ask price median bid price; median ask price average bid price; average ask price lowest bid price; highest ask price

a

If there are nine directors that need to be elected, how many shares do you need to own in order to guarantee a seat on the board under straight voting? 50 percent of the stock + 1 share 9 shares 50 percent of the stock 10 percent of the stock + 1 share

a

Institutional memory can be enhanced by ______. staggering board elections proxy vote never firing anyone electing all board members at the same time

a

New York Stock Exchange Designated Market Makers (DMMs) were formerly called ______. specialists $2 brokers floor brokers floor traders

a

Which type of voting procedure provides "institutional memory"? staggered accelerated discounted institutional

a

What beneficial purpose does staggering serve? It provides institutional memory. All directors are elected at the same time. It benefits minority shareholders. It insures discontinuity on the board of directors.

a

A PE ratio that is based on estimated future earnings is known as a ______ PE ratio. voodoo forward target relative

b

A website that allows investors to trade directly with one another is called ______. a DOT an OTC a GAAP an ECN

d

When voting for the board of directors, the number of votes a shareholder is entitled to is generally determined as follows: two votes per share held one vote per share held one vote for every 100 shares held one vote per shareholder

a

Identify the two types of preferred dividends: cash and stock cumulative and noncumulative convertible and nonconvertible callable and puttable

b

Which of the following defines the primary market? The primary market is where stocks trade once they have been issued. Primary markets are markets for basic goods and services. Primary markets are markets that are regulated by the Fed. The primary market is where stocks are issued for the first time.

d

Which one of the following is true about dividend growth patterns? Dividends never grow. Dividends always reduce at a differential rate. Dividends never have a zero growth rate. Dividends may grow at a constant rate.

d

If you hold 50 shares of a particular corporation's common stock and there are 5 directors to be elected, how many votes will you be allowed to cast under cumulative voting? 50 250 10 5

b

Someone who maintains an inventory of stocks and buys and sells those stocks is known as a ______. speculator dealer retailer broker

b

A person who brings buyers and sellers together is called a(n) ______. dealer lawyer broker investor

c

If the growth rate (g) is zero, the capital gains yield is ______. higher than the dividend yield 100 percent zero cyclical

c

If there are nine directors to be elected, what is the least number of shares you will need to guarantee a seat on the board under cumulative voting? 9 percent of the stock plus 1 share 9 shares 10 percent of the stock plus 1 share 10 percent of the stock

c

If unpaid preferred dividends must be "caught up" before any common dividends can be paid, they are called ______ dividends. make-whole preferential cumulative catch-up

c

Initial public offerings of stock occur in the ______ market. secondary futures primary commodities

c

Stock price reporting has increasingly moved from traditional print media to the ______ in recent years. radio ticker tape machine internet network newscasts

c

The ______ can be interpreted as the capital gains yield. inflation rate yield to maturity growth rate dividend yield

c

The constant growth model assumes that ______. debt remains constant stock prices remain constant dividends change at a constant rate

c

The dividend yield is determined by dividing the expected dividend (D1) by: the discount rate (R). retained earnings. the current price (P0). the growth (g).

c

The price of a share of common stock is equal to the present value of all ______ future dividends. paid stable expected growing

c

The two most important stock markets in the United States are the New York Stock Exchange and ______. the Tokyo Stock Exchange the TSX Venture Exchange Nasdaq the London Stock Exchange

c

A written authorization for one shareholder to vote the stock of another shareholder is called a(n) ______. receipt epoxy invoice proxy

d

Earnings over the coming year are expected to be $3 and a benchmark PE of 15 applies to earnings over the previous year. The ______, or forecast, price over the coming year is $45. actual calculated nominal target

d

The fundamental business of the New York Stock Exchange is to attract ______. customers institutions dealers order flow

d