Chapter 8

The NYSE member who acts as a dealer in a small number of securities is called a(n) _____.

specialist

Which of the following are expected cash flows to investors in stocks?

Capital gains Dividends

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

internet

The goal of many successful organizations is a(n) ______ rate of growth in dividends.

steady

When the stock being valued does not pay dividends,

the dividend growth model can still be used.

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

more

When voting for the board of directors, the number of votes a shareholder is entitled to is usually _____ vote per share held.

1

Which of the following are reasons why it is more difficult to value common stock than it is to value bonds?

Common stock cash flows are not known in advance The rate of return required by the market is not easily observed. The life of a common stock is essentially forever.

NASDAQ has which of these features?

Computer network of securities dealers Multiple market maker system

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

Fasle

Which of the following are features of common stock?

It has no special preference in receiving dividends. It has no special preference in bankruptcy. It generally has voting rights.

Which of the following occurs in the primary market?

Newly-issued stocks are initially sold

The formula for valuing a constant growth stock is _____.

P0 = D1/(R − g)

Which of the following entities declares a dividend?

The board of directors

A benchmark PE ratio can be determined using:

a company's own historical PEs the PEs of similar companies

A person who brings buyers and sellers together is called a(n) ______.

broker

Someone who maintains an inventory of stocks and buys and sells those stocks is known as a ____.

dealer

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

designated

A ____ is a payment by a corporation to shareholders, made in either cash or stock.

dividend

Common stock as no special preference either in receiving ____ or in bankruptcy.

dividends

The assumption of constant growth infers that _________.

dividends change at a constant rate

When voting for the board of directors, the number of votes a shareholder is entitled to is generally determined as follows:

one vote per share held

Preferred stock has preference over common stock in the _____.

payment of dividends distribution of corporate assets

A stock with dividend priority over common stock is called a ____ stock.

preferred

The trading of existing shares occurs in the ______ market.

secondary

Investment firms that are active participants in stocks assigned to them are called ____ liquidity providers.

supplemental

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

False

An NYSE member who executes customer buy and sell orders is called a ____ broker.

floor