Finance Chapter 8 Smartbook Questions

b, c

A benchmark PE ratio can be determined using: Multiple select question. a. the constant-growth model b. a company's own historical PEs c. the PEs of similar companies d. Bank of Canada estimates

d. broker

A person who brings buyers and sellers together is called a(n) ______. Multiple choice question. a. dealer b. lawyer c. investor d. broker

more

A share of common stock is _________ (less/more) difficult to value in practice than a bond.

b. constant dividend amount

A zero-growth model for stock valuation is distinguished by a ____. Multiple choice question. a. constant discount rate b. constant dividend amount c. zero stock price at Year 0 d. negative dividend growth rate

designated

An NYSE member who acts as a dealer in particular stocks is called a ________ market maker.

b. dealer

Someone who maintains an inventory of stocks and buys and sells those stocks is known as a ____. Multiple choice question. a. retailer b. dealer c. speculator d. broker

internet

Stock price reporting has increasingly moved from traditional print media to the ________ in recent years.

b. steady

The goal of many successful organizations is a(n) ______ rate of growth in dividends. Multiple choice question. a. negative b. steady c. erratic d. zero

b. Newly-issued stocks are initially sold

Which of the following occurs in the primary market? Multiple choice question. a. Issuers repurchase shares b. Newly-issued stocks are initially sold c. Outstanding shares are resold d. Shareholders gift shares to charities

c. Dividends / Discount rate

Which of the following represents the valuation of stock using a zero-growth model? Multiple choice question. a. Discount rate / Dividends b. (Dividends)^discount rate c. Dividends / Discount rate d. Dividends × Discount rate

c. Dividends may grow at a constant rate.

Which one of the following is true about dividend growth patterns? Multiple choice question. a. Dividends always grow at a constant rate. b. Dividends never grow. c. Dividends may grow at a constant rate. d. Dividends always grow at a differential rate.

d. Po = D1/(R − g)

The formula for valuing a constant growth stock is _____. Multiple choice question. a. P = D1 − g/R b. P = D1/(R − g)^2 c. R = P − D1/g d. Po = D1/(R − g)

d. internet

Stock price reporting has increasingly moved from traditional print media to the ______ in recent years. Multiple choice question. a. radio b. network newscasts c. ticker tape machine d. internet

false

T/F: For investors in the stock market, dividends from stocks are fixed and guaranteed, while capital gains are variable and not guaranteed.

a. specialist

The NYSE member who acts as a dealer in a small number of securities is called a(n) _____. Multiple choice question. a. specialist b. floor trader c. floor broker d. member

b, c, f

Three special case patterns of dividend growth include _____. Multiple select question. a. fast growth b. nonconstant growth c. zero growth d. discounted growth e. negative growth f. constant growth

a. the dividend growth model can still be used.

When the stock being valued does not pay dividends, Multiple choice question. a. the dividend growth model can still be used. b. the dividend growth model can not be used.

a, c

Which of the following are expected cash flows to investors in stocks? Multiple select question. a. Capital gains b. Fees c. Dividends d. Interest

a, c, d

Which of the following are reasons why it is more difficult to value common stock than it is to value bonds? Multiple select question. a. The life of a common stock is essentially forever. b. All bond and stock cash flows are guaranteed to be paid. c. Common stock cash flows are not known in advance d. The rate of return required by the market is not easily observed.

b. primary

Initial public offerings of stock occur in the ____ market. Multiple choice question. a. commodities b. primary c. secondary d. futures

b, c

NASDAQ has which of these features? Multiple select question. a. Physical trading floor b. Computer network of securities dealers c. Multiple market maker system d. Single DMM system