FIN ch 14

A PEG value that is less than _____ may indicate an undervalued stock.

1

The market capitalization for Exider, Inc. is $1 million. They have just completed a 2-for-1 stock split. What will the market capitalization be after the stock split? $500,000 $3 million $1 million $2 million

1 million

Price-earnings ratio is 16, and annual EPS growth is 11%. Solve for the PEG ratio. Multiple choice question. 0.68 1.45 145 0.65

1.45

If after-tax income equals $2,300,000 and the number of shares outstanding equals 1,200,000, what is the earnings per share?

1.92 2300000/1200000

Laura purchased 100 shares of stock for $81 per share and paid a $65 commission for the transaction. She is now selling the stock for $97 per share and a $65 commission for the transaction. She was also paid $200 in dividends while she owned the stock. What is Laura's total return?

1670

Annual dividend is $1.65, and market value is $78. Solve for the dividend yield. Multiple choice question.

2%

In the case of a 2 for 1 stock split, the stockholder now owns: Multiple choice question. 2x the number of shares previously owned 3x the number of shares previously owned 1x the number of shares previously owned 1/2 the number of shares previously owned

2x

If the price per share is equal to $75.00 and earnings per share is equal to $2.50, then the price-earnings ratio is equal to _______

30

When an investment was sold it was worth $4,000, and the original investment was $3,400. The investment was held for three years. Solve for the annualized holding period yield. Multiple choice question.

5.88

Dividends are $4.56, and the earnings per share is $7.65. Solve for the dividend payout. Multiple choice question.

59.6%

If a company sells stock to the public, it must report financial information to: the Securities and Exchange Commission. stocks and bonds commission division. local government. upper management.

SEC

After stock is sold to the public, the federal government requires that corporations report financial information to the __________

Securities and Exchange Commission

Preferred stock = Dividend amount is known before purchase. Common stock = Dividend amount is unknown until declared.

TRUE

Annualized holding period yield

______ = Total return/Original investment * 1/Number of years invested.

PEG ratio = Price-earnings ratio/_______ annual earnings per share growth total return annual interest growth total investment

annual earnings per share growth

A yield calculation that takes into account the total return, the original investment, and the time the investment is held is called the: dividend payout period. annualized holding period. total return. dividend yield.

annualized holding period

If the business is dissolved, preferred stockholders have the first claim to the corporation's _______ after creditors.

assets

A stock selling ex-dividend will be trading:

at a lower the price

A price-earnings ratio above ______ indicates investor optimism and is considered high. 5 times earnings the average for the market 10 times the average earnings 15 times earnings

average for market

A measure that compares the volatility associated with a specific stock issue with the volatility of the Standard & Poor's 500 Stock Index is called: beta dividend payout total return annualized holding per

beta

A 2-for-1 stock split will:

cut the price per share in half

For more mature and older corporations that have a lower earnings expectations, the price of their stock will _________ if the future expectations decreases.

decrease

An advantage of being a preferred stockholder is the ability to receive cash ________ payments before common stockholders.

dividend

The percentage of a firm's earnings paid to stockholders in cash is called Blank______.

dividend payout

The annual dollar amount of income generated by an investment divided by the investment's current market value is called Blank______. Multiple choice question. dividend payout total return price-earnings growth ratio dividend yield

dividend yield

Total return equals current _______ plus capital _______.

dividends/return gains/changes/losses

All newspapers: provide stock information print the same stock information do not print the same stock information

do not print the same info

Which of the following exists to provide estimates of price-earnings ratios and earnings per share?

earning estimates

A corporation's earnings divided by the number of outstanding shares of a firm's common stock is called Blank______. benchmark ratio G.E. ratio earnings per share price-earnings ratio

earnings per share

Price-earnings (P-E) ratio equals price per share divided by: Multiple choice question.

earnings per share

In the annual report, you want to read shareholder's letters to see if their _______ were met each year.

goals

A(n) _________ stock is an investment that pays higher-than-average dividends.

income

If a company shows it is able to generate future earnings, it will most likely see the price of its stock ______

increase

Stocks with low P-E ratios tend to be issued by: Multiple choice question.

large, established companies

A stock split does not guarantee an increase in the stock's _______ value in the long term.

market/sale/price

A stock issued by a corporation that has capitalization of between $2 and $10 billion is known as what kind of stock?

mid cap

Information on companies' Web sites is likely to be: more up-to-date than printed materials hard to find on the Web site inaccurate costly to produce

more up to date

Annualized holding period yields have Multiple choice question. inverse relationship with interest rates a general overall average a specific average no meaningful specific average

no meaningful specific average

The total return is a calculation that includes the annual dollar amount of income as well as any increase or decrease from the Blank______ price of the investment. Multiple choice question.

original purchase

A stock with a PEG value greater than 1 may imply: Multiple choice question. an overvalued stock. an undervalued stock. low interest rates. a correctly valued stock.

over valued stock

When calculating total return on stock, you must consider which of the following items? price of share at the time of sale price earnings ratio/time interest rate of current market price of share at the time of purchase amount of dividends earned

price of share at the time of sale price of share at the time of purchase amount of dividends earned

A dividend yield is the annual dollar amount of income generated by an investment divided by the investment's current ______.

price per share Dividend yield = annual dividend amount divided by price per share

The price of a share of stock divided by the corporation's earnings per share of stock is called Blank______. price-earnings ratio G.E. ratio earnings per share after-tax ratio

price-earnings ratio

What factor gives investors an idea of how much they are paying for a company's earning power?

price-earnings ratio

Earning estimates exist to provide estimates of which of the following? Multiple select question.

price-earnings ratios earnings per share

The corporations must disclose corporate earnings, assets, liabilities, products, or services and the qualifications of top management in a . __________

prospectus

What document discloses corporate earnings, assets, liabilities, products, or services and the qualifications of top management? par value report prospectus investor line report Mergent's report

prospectus

A dividend payout is the percentage of a firm's earnings paid to _______ in cash.

shareholders

Earnings per share is equal to after-tax income divided by the number of outstanding _________of a firm's common stock

shares

A procedure in which the shares of stock owned by existing stockholders are divided into a larger (or smaller) number of shares is called a Blank______.

stock split

A higher dividend yield typically signals a Blank______. Multiple choice question. error in the calculations large average stock price weaker investment stronger investment

stronger investment

The more _____ an investment has to work, the more money it will likely accumulate.

time

Dividend payout is equal to dividend amount divided by Blank______. Multiple choice question.

total dividends

High price-earnings ratio = More investors will pay for earnings. Low price-earnings ratio = Less investors will pay for earnings.

true

True or false: The annualized holding period is a yield calculation that takes into account the total return, the original investment, and the time the investment is held. True false question.

true

True or false: There are alternative sources for stock advisory services.

true

True or false: When selling a stock, profit or loss from stock sale equals the net selling price less the adjusted cost (purchase price plus fees).

true

conservative - lower betas growth stocks-higher beta

true

With a stock split, a company's total market capitalization: decreases slightly. decreases by half. increases. remains unchanged.

unchanged

Which of the following is NOT a widely used stock advisory service that provides detailed research? Value Line Standard and Poor's Yahoo Morningstar

yahoo

Dividends are $450, capital gains are $5,645, and interest rates are 11%. Solve for total return.

6095

Hannah owns 300 shares of "Dirt International." The company does a 3 for 1 stock split. Hannah now has 900 shares 0 shares 300 shares 100 shares

900

Corporations may split stock to: bring the value down to the theoretical price range for the stock. fund new projects. avoid taxation on the whole share of each stock. increase sales and revenues.

bring the value down to the theoretical price range for the stock.