FN340 Ch 8

When the stock being valued does not pay dividends,

the dividend growth model can still be used.

Investment firms that are active participants in stocks assigned to them are called ________ liquidity providers.

supplemental

A benchmark PE ratio can be determined using: A) the PEs of similar companies B) Bank of Canada estimates C) a company's own historical PEs D) the constant-growth model

A and C

A stock with dividend priority over common stock is called a ________ stock.

preferred

Initial public offerings of stock occur in the ____ market.

primary

The NYSE member who acts as a dealer in a small number of securities is called a(n) _____.

specialist

Which of the following occurs in the primary market? A) Newly-issued stocks are initially sold B) Issuers repurchase shares C) Shareholders gift shares to charities D) Outstanding shares are resold

A

Which of the following are expected cash flows to investors in stocks? A) Capital gains B) Dividends C) Interest D) Fees

A and B

Capital Corp is considering a project whose internal rate of return is 14%. If Capital's required return is 14%, the project's NPV is:

Zero

According to the average accounting return rule, a project is acceptable if its average accounting return exceeds _____.

a target average accounting return

The AAR is calculated by taking the average net income and dividing it by the average ________ value.

book

A person who brings buyers and sellers together is called a(n) ______.

broker

Someone who maintains an inventory of stocks and buys and sells those stocks is known as a ____.

dealer

Common stock as no special preference either in receiving ________ or in bankruptcy.

dividends

The assumption of constant growth infers that _________.

dividends change at a constant rate

Which of the following are features of common stock? A) It generally has voting rights. B) It has no special preference in receiving dividends. C) It receives interest semi-annually. D) It receives dividends every quarter. E) It has no special preference in bankruptcy.

A, B, and E

NASDAQ has which of these features? A) Physical trading floor B) Multiple market maker system C) Single DMM system D) Computer network of securities dealers

B and D

Preferred stock has preference over common stock in the _____. A) portfolios of individual investors B) number of votes given C) payment of dividends D) distribution of corporate assets

C and D

An NYSE member who executes customer buy and sell orders is called a ________ broker.

floor

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

internet