315 quiz ch 6

Differential growth refers to the stock of a firm that increases its dividend by

varying rates over a period of time.

The total return on a stock is equal to

Capital gains yield + Dividend yield

The voting procedure whereby shareholders may cast all of their votes for one candidate for the board of directors is called _____ voting

Cumulative

The expected dividend yield is equal to

Expected cash dividend / Current stock price.

The market in which new securities are originally sold to investors is called the _____ market

Primary

The voting procedure where a shareholder grants authority to another individual to vote his/her shares is called _____ voting

Proxy

A dealer will buy at the ____ price and sell at the _____ price

bid; ask

The rate at which a stock's price is expected to appreciate (or depreciate) is called the _____ yield

capital gains

A market participant who buys and sells securities from inventory is called a

dealer

A stock that pays a constant annual dividend will have a market price that

decreases when the market rate of return increases.

The EV/EBITDA ratio has an advantage over the PE ratio in situations where comparisons are being made of firms that vary based on their

degree of leverage

Greener Grass Co. pays a constant annual dividend of $1 a share and has 1,000 shares of common stock outstanding. The company

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

The underlying assumption of the dividend growth model is that a stock is worth

the present value of the future income provided by that stock.