FIN 351 Chapter 8 Quiz

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

Fazekas Companies is preparing to pay annual dividends of $1.48, $1.60, and $1.75 per share over the next three years, respectively. After that, the annual dividend will be $1.90 per share indefinitely. What is this stock worth to you per share if you require a return of 14.6 percent?

$12.32

Moody Properties is going to reduce its annual dividend by 10 percent a year for the next two years. After that, it will maintain a constant dividend of $2 per share. Last year, the company paid an annual dividend of $3 per share. What is the market value of this stock if the required return is 13.7 percent?

$15.55

Schwartz Imports just paid an annual dividend of $2.69 per share and is expected to increase that amount by 5.2 percent per year. If you are planning to buy 1,000 shares of this stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 12.6 percent at the time of your purchase?

$40.23

Elevation Systems, Incorporated, expects its dividends to grow at 25 percent per year for the next seven years before levelling off to a constant 3 percent growth rate. The required return is 11 percent. What is the current stock price if the annual dividend per share that was just paid was $1.05?

$43.21

Kim Squared preferred stock pays a constant $5.10 dividend every year. What is the required return if the stock price is $43.73 per share?

11.66%

Jensen Shipping has 38,400 shares outstanding and uses cumulative voting. The firm grants one vote for each share of common stock. What is the minimum number of votes required to obtain a seat on the board of directors if there are three open seats?

9,601

Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

Common

Which one of the following best describes Nasdaq?

Computer network of securities dealers

The average time for a trade on the NYSE Arca is best defined as less than:

one second.