Chapter 8

Which one of the following is the rate at which a stock's price is expected to appreciate?

Capital gains yield

What is the model called that determines the present value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate?

Dividend growth

What are the distributions of either cash or stock to shareholders by a corporation called?

Dividends

A securities market primarily composed of dealers who buy and sell for their own inventories is referred to which type of market?

Over-the-counter

Which one of the following is a type of equity security that has a fixed dividend and a priority status over other equity securities?

Preferred stock

The dividend growth model:

Requires the growth rate to be less than the required return.

Winston Co. has a dividend-paying stock with a total return for the year of -6.5 percent. Which one of the following must be true?

The stock has a negative capital gains yield.

The secondary market is best defined by which one of the following?

market where outstanding shares of stock are resold