WklyEx06

Supernormal growth is defined as the growth rate that __________________.

is unsustainable over the long term

Pick the transaction that occurs in the primary market from below.

A purchase of newly issued stock from the issuer

_______________ stock receives no preferential treatment regarding either dividends or bankruptcy proceedings.

Common

Pick the correct statement related to preferred stock from below.

Cumulative preferred shares are more valuable than comparable noncumulative shares.

Which one of the following applies to the dividend growth model?

Even if the dividend amount and growth rate remain constant, the value of a stock can vary.

Pick the correct statement related to the NYSE from below.

Exchange members must purchase trading licenses.

Pick the statement that applies to NASDAQ from below.

Multiple market maker system

Pick the correct statement related to NASDAQ from below.

NASDAQ has three separate markets

____________ can access Level 3 of NASDAQ's information.

NASDAQ market makers

In accordance with the dividend growth model, a decrease in the _____________ will lead to an increase in the current value of a stock.

NOT > number of future dividends, provided the total number of dividends is less than infinite

We call an agent who maintains an inventory from which he or she buys and sells securities a

NOT broker

_________________ is a securities market primarily composed of dealers who buy and sell for their own inventories.

Over-the-counter

Pick the correct statement from below.

Stocks can have negative growth rates.

South Face has a dividend yield of 4.5% and a total return for the year of 3.5%. Which one of the following must be true?

The stock has a negative capital gains yield.

According to the dividend growth model, if you expect the market rate of return to increase for all stocks, then you should also expect ____________________.

a decrease in all stock values

The rate at which a stock's price is expected to appreciate is called ___________________.

capital gains yield

NASDAQ is best described as the __________________.

computer network of securities dealers

A _____________ is a member who acts as a dealer in a limited number of securities on the floor of the NYSE.

designated market maker

The right of ____________ is never directly granted to all shareholders of a publicly held corporation.

determining the amount of the dividend to be paid per share

To be able to apply the two-stage dividend growth model to a stock, the stock must have ______________________.

dividend payments that increase by 10 percent per year for five years followed by dividends that increase by 3 percent annually thereafter

We call the distributions of either cash or stock to shareholders _____________.

dividends

A _____________ is a person on the floor of the NYSE who executes buy and sell orders on behalf of customers.

floor broker

A ____________ is an individual on the floor of the NYSE who owns a trading license and buys and sells for his or her personal account.

floor trader

_______________ represents the capital gains yield as used in the dividend growth model.

g

When we estimate the current price of a stock using the two-stage dividend growth model, we assume that the stock will ____________________.

grow at a fixed rate for a period of time after which it will grow at a different rate indefinitely.

A/An ____________ of NYSE is the owner of a trading license for the stock exchange

member

Hoosier Press has 2,000 shares of common stock outstanding. Although the firm has a dividend policy whereby it pays a constant annual dividend of $1.40 per share of common stock, it ___________________.

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

The _____________ is the stream of customer orders coming in to the NYSE trading floor.

order flow

Indiana Trucking has paid an annual dividend of $1 per share on its common stock for the past 20 years. The company is expected to continue paying this amount of dividend per share long into the future. With the above information, one share of the firm's stock is _____________.

priced the same as a $1 perpetuity

The secondary market of stock is the market _________________.

where outstanding shares of stock are resold