FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Valuing Stocks

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Campbell Soup Co paid a $1.55 dividend per share in 2004, which grew to $1.95 in 2009. This growth is expected to continue. What is the value of this stock at the beginning of 2010 when the required return is 10.5 percent?

A) $35.20
B) $34.16
C) $33.48
D) $32.17

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following statements is incorrect?

A) Preferred stock prices fluctuate with market interest rates and behave like corporate bond prices.
B) Common stock price changes with the value of the company's underlying business.
C) Preferred stockholders have higher precedence for payment in the event of firm liquidation from bankruptcy.
D) All of these statements are correct.

E) All of the above
F) A) and C)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

JUJU's dividend next year is expected to be $5.50. It is trading at $45 and is expected to grow at 4% per year. What is JUJU's dividend yield and capital gain?

Many companies grow very fast at first, but slower future growth can be expected. Such companies are called

A stock is expected to pay a $5.00 dividend per share. The growth rate is expected to be -2%. If investors demand 8% on this stock, what is the expected price of the stock 5 years from now?

Selling Stock with a Limit Order You would like to sell 400 shares of International Business Machines (IBM) . The current bid and ask quotes are $96.24 and $96.17, respectively. You place a limit sell-order at $96.20. If the trade executes, how much money do you receive from the buyer?

A fast growing firm recently paid a dividend of $1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?

GEN has 10 million shares outstanding and a stock price of $89.25. What is GEN's market capitalization?

Constant Growth Stock Valuation Best Buy Co (BBY) paid a $0.27 dividend per share in 2003, which grew to $0.49 in 2007. This growth is expected to continue. What is the value of this stock at the beginning of 2007 when the required rate of return is 17.23 percent?

JPM has earnings per share of $3.75 and P/E of 47. What is the stock price?

What ten sectors of the economy are represented in the S&P 500 Index?

A firm is expected to pay a $4.00 dividend per share. The stock is selling in the market place for $55.00 per share. If investors are demanding 12% on this stock, what is this stock's growth rate?

A firm's stock is selling at $75.00 per share. Its growth rate is 10% and investors demand 17% on this stock. What is the firm's expected dividend?

Explain the characteristics of preferred stock.

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -3%. Its recent divided was $2.50. What is the value of this stock when the required return is 7%?

Variable Growth A fast growing firm recently paid a dividend of $0.50 per share. The dividend is expected to increase at a 25 percent rate for the next 3 years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 15 percent discount rate is appropriate for this stock, what is its value?

When might the constant growth model not be used?

A firm is expected to pay a $2.00 dividend per share. The stock is selling in the market place for $50.00 per share. If investors are demanding 10% on this stock, what is this stock's growth rate?

A firm has been losing sales due to technological obsolescence. It projects growth for the future to be -2%. Its recent divided was $2.00. What is the value of this stock when the required return is 9%?

The Standard & Poor's 500 Index includes