BA 240

discount rate

A decrease in which of the following will increase the current value of a stock according to the dividend growth model?

broker

An agent who arranges a transaction between a buyer and a seller of equity securities is called a:

Dividends

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

The secondary market is best defined as the market:

where outstanding shares of stock are resold.

must still declare each dividend before it becomes an actual company liability.

Boston Free Press has a dividend policy whereby the firm pays a constant annual dividend of $2.40 per share of common stock. The firm has 1,000 shares of stock outstanding. The company:

9%

Caccamise Company is expected to maintain a constant 3.6 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 5.4 percent, what is the required return on the company's stock?

Proxy fight for control of the board

Chemical Mines has 5,000 shareholders and is preparing to elect two new board members. You do not own enough shares to personally control the elections but are determined to oust the current leadership. Likewise, no other single shareholder owns sufficient shares to personally control the outcome of the election. Which one of the following is the most likely outcome of this situation given that some shareholders are happy with the existing management?

35.06

Hudson Corporation will pay a dividend of $2.70 per share next year. The company pledges to increase its dividend by 3.50 percent per year indefinitely. If you require a return of 11.20 percent on your investment, how much will you pay for the company's stock today?

Primary

Ernst & Frank stock is listed on Nasdaq. The firm is planning to issue some new equity shares for sale to the general public. This sale will definitely occur in which one of the following markets?

4.85%

Fegley, Incorporated, has an issue of preferred stock outstanding that pays a $4.75 dividend every year in perpetuity. If this issue currently sells for $98 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

capital gains yield

Read Corporation currently pays an annual dividend of $1.46 per share and plans on increasing that amount by 2.75 percent annually. Cho, Incorporated, currently pays an annual dividend of $1.42 per share and plans on increasing its dividend by 3.1 percent annually. Given this information, you know for certain that the stock of Cho has a higher ________ than the stock of Read.

The stock has a negative capital gains yield.

Reyes has a dividend yield of 5.4 percent and a total return for the year of 4.8 percent. Which one of the following must be true?

50 percent plus one vote

The Blue Marlin is owned by a group of five shareholders who all vote independently and who all want personal control over the firm. What is the minimum percentage of the outstanding shares one of these shareholders must own if he or she is to gain personal control over this firm given that the firm uses straight voting?

a 25.8 b 32.25

The Dahlia Flower Company has earnings of $2.15 per share. The benchmark PE for the company is 12. a. What stock price would you consider appropriate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.What if the benchmark PE were 15? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

8.25%

The next dividend payment by Savitz, Incorporated, will be $2.25 per share. The dividends are anticipated to maintain a growth rate of 4 percent forever. If the stock currently sells for $53 per share, what is the required return?

Right to share in company profits prior to other shareholders

Valenica Corporation has a capital structure that includes bonds, preferred stock, and common stock. Which one of the following rights is most apt to be granted to the preferred shareholders?

capital gains yield

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

a. Stock price at a price-sales of 6.0$107.14selected answer correct b. Stock price at a price-sales of 5.4$96.43selected answer correct

Z Space, Incorporated, is a new company and currently has negative earnings. The company's sales are $2.5 million and there are 140,000 shares outstanding. a. If the benchmark price-sales ratio is 6.0, what is your estimate of an appropriate stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.What if the price-sales ratio were 5.4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

An agent who maintains an inventory from which he or she buys and sells securities is called a:

dealer