Fin Mgmt Ch 7

10%

What is the total return for a stock that currently sells for $100, is expected to pay a dividend in one year of $2, and has a constant growth rate of 8%?

Primary

Shares of stock are first brought to the market and sold to investors in the ___ market.

internet

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

a fact-to-face auction market a physical location

The NYSE differs from the NASDAQ primarily because the NYSE has:

specialists

The New York Stock Exchange Designated Market Makers (DMMs) were formerly called ___.

growth rate

The ___ can be interpreted as the capital gains yield.

dividends change at a constant rate

The constant-growth model assumes that ___.

the current price (P1)

The dividend yield is determined by dividing the expected divident (D1) by:

order flow

The fundamental business of the New York Stock Exchange is to attract ___.

Expected

The price of a share of common stock is equal to the present value of all ___ future dividends.

growth; discount

The value of a firm is derived using the firm's ___ rate and its ___ rate.

False

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

target

Using a benchmark PE ratio against current earnings yields a forecasted price called a ___ price.

discount rate dividend

What information do we need to determine the value of a stock using the zero growth model?

$22.73

What is the price of a stock at the end of one year (p1) if the dividend for year 2 (d2) is $5, the price for year 2 (p2) is $20, and the discount rate is 10%?

One vote per share held

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

The right to vote on matters of importance the right to share proportionally in an common dividends paid the right to share proportionally in any residual value in the even of liquidation

Which of the following are rights of common stock holders

forward

a PE ratio that is based on estimated future earnings is known as a ___ PE ratio.

dividend may grow at a constant rate

which on of the following is true about dividend growth patterns?

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

A benchmark PE ratio can be determined using:

broker

A person who brings buyers and sellers together is call a(n) ___.

20.00

A zero-growth stock pays a dividend of $2 per share and has a discount rate of 10%. What will the stocks price be?

multiple market maker system computer network of securities dealers

NASDAQ has which of these features?

400

If Joan owns 100 shares of ABC company and the company is electing 4 directors, under cumulative voting, Joan would usually have ___ votes.

non-constant

If a company's growth for years 1 through 3 is 20% but stabilizes at 5% beginning in year 4, its growth pattern would be described as ___.

primary

Initial public offerings of stock occur in the ___ market.

decreases

All else constant, the dividend yield will increase if the stock price ___.

payment of dividends distribution of corporate assets

Preferred stock has preference over common stock in the: