FIN CH 7 HW quizlet

A specialist is a(n)

NYSE member who functions as a dealer for a limited number of securities

A broker is an agent who:

brings buyers and sellers together

Which one of the following types of securities has no priority in a bankruptcy proceeding?

common stock

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?

cumulative preferred

An agent who buys and sells securities from inventory is called a

dealer

Inside quotes are defined as the

lowest asked and highest bid offers

Newly issued securities are sold to investors in which one of the following markets?

primary

ASD Corp. will pay a dividend of $1 on each of its common shares next year. The company has stated that it will maintain a constant growth rate of 5.5% per year forever. If you require 8.8% return to invest in ASD stock (and assuming you agree with ASD's growth projections), how much will you pay per share?

3.30

Solinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8 years, since the firm needs to plow back its earnings to fuel growth. The company will then pay a $2.56 per share dividend in year 9 and will increase the dividend by 5 percent per year thereafter. If investors require 7.8 percent return to invest in this stock, what is its current share price?

50.13

Mackery, Inc., has an outstanding issue of preferred stock that pays a $7.52 dividend every year. If this issue currently sells for $96.49 per share, what return to market investors require on it currently?

7.79