Business Finance - Exam 5

If you receive a $2 dividend per share on your 100 shares, your total dividend income is ____.

$2*100

The dividend yield for a one-year period is equal to the annual dividend amount divided by the ____.

Beginning Stock Price

The total dollar return is the sum of dividends and __________.

Capital Gains or Losses

When a company declares a dividend, shareholders generally receive ____.

Cash

The two potential ways to make money as a stockholder are through _______ and capital appreciation.

Dividends

Which of the following are ways to make money by investing in stocks?

Dividends & Capital Gains

True or false: Because T-bills have low risk relative to common stocks, T-bills cannot outperform common stocks.

False

True or false: Percentage returns are difficult to use for comparisons because they depend on the dollar amount invested.

False

Dividends are the ______ component of the total return from investing in a stock.

Income

An unrealized gain is treated the same as a realized gain when computing the total

Return

Equation for Total Return

Total return = Expected return + Unexpected return

True or false: A capital gain on a stock is counted as part of the total return whether or not the gain is realized from selling the stock.

True

True or false: A capital loss is the same thing as a negative capital gain.

True

True or false: The dividend yield = Dt+1/Pt

True

If you wish to create a portfolio of stocks, what is the required minimum number of stocks?

You must invest in stocks of more than one corporation.

Percentage returns are more convenient than dollar returns because they:

allow comparison against other investments

The percentage change in the price of a stock over a period of time is called its ___________.

capital gain yield

total return percentage

dividend yield + the capital gains yield.

The total dollar return on a stock is the sum of the ____ and the _____.

dividends; capital gains

The capital gains yield can be found by finding the difference between the ending stock price and the initial stock price and dividing it by the:

initial stock price

What will the dividend income be on W number of shares of XYZ stock if XYZ distributes a $Y per share dividend?

W*Y

A positive capital gain on a stock results from ___.

an increase in price.