《Chapter 4 The Value of Common StocksQC Economics》由会员分享，可在线阅读，更多相关《Chapter 4 The Value of Common StocksQC Economics（62页珍藏版）》请在金锄头文库上搜索。
1、Chapter 4 The Value of Common StocksMultiple Choice Questions1.If the Vol. 100s is reported as 10,233 in the Wall Street Journal quotation, then the trading volume for that day of trading is: A)10,233 shares B)102,330 shares C)1,023,300 shares D)10,233,000 shares Answer: CType: MediumPage: 60Respons
2、e: Trading volume = 10,233 * 100 = 1,023,3002.The dividend yield reported as Yld. % in The Wall Street Journal quotation is calculated as follows: A)(dividends / hi) B)(dividends / lo) C)(dividends / close) D)None of the above Answer: CType: MediumPage: 603.The Wall Street Journal quotation for a co
3、mpany has the following values: Div: 2.28, PE: 19, Close: 75.30. Calculate the dividend pay out ratio for the company. A)58% B)12% C)75% D)None of the above Answer: AType: DifficultPage: 60Response: EPS = (75.30)/19 = 3.9631 dividend payout = 2.28/3.9631 = 0.5753= 58%4.If the Wall Street Journal Quo
4、tation for a company has the following values close: 26.00; Net chg: =+1.00; then the closing price for the stock for the previous trading day was? A)$26 B)$25 C)$27 D)None of the above. Answer: BType: MediumPage: 60Response: Previous closing = todays closing net chg. = 26.00-1.00= $25.005.The value
5、 of a common stock today depends on: A)Number of shares outstanding and the number of shareholders B)The Wall Street analysts C)The expected future dividends and the discount rate D)Present value of the future earnings per share Answer: CType: EasyPage: 626.Super Computer Companys stock is selling f
6、or $100 per share today. It is expected that this stock will pay a dividend of 5 dollars per share, and then be sold for $120 per share at the end of one year. Calculate the expected rate of return for the shareholders. A)20% B)25% C)10% D)15% Answer: BType: EasyPage: 62Response: r = (120+5-100)/100
7、 = 25%7.PC Company stockholders expect to receive a year-end dividend of $10 per share and then be sold for $122 dollars per share. If the required rate of return for the stock is 20%, what is the current value of the stock? A)$100 B)$122 C)$132 D)$110 Answer: DType: MediumPage: 62Response: P = (122
8、+10)/1.2 = 1108.Macrohard Company expects to pay a dividend of $6 per share at the end of year one, $8 per share at the end of year two and then be sold for $136 per share. If the required rate on the stock is 20%, what is the current value of the stock? A)$100 B)$105 C)$110 D)$120 Answer: BType: Me
9、diumPage: 62Response: P = (6/1.2)+(8+136)/(1.22) = 1059.The constant dividend growth formula P0 = D1/(r-g) assumes: A)The dividends are growing at a constant rate g forever. B)r g C)g is never negative. D)Both A and B Answer: DType: MediumPage: 6410.Casino Co. is expected to pay a dividend of $6 per
10、 share at the end of year one and these dividends are expected to grow at a constant rate of 8% per year forever. If the required rate of return on the stock is 20%, what is current value of the stock today? A)$30 B)$50 C)$100 D)$54 Answer: BType: MediumPage: 64Response: P = (6/(0.2-0.08) = 5011.Wor
11、ldTour Co. has just now paid a dividend of $6 per share (Do), the dividends are expected to grow at a constant rate of 5% per year forever. If the required rate of return on the stock is 15%, what is the current value on stock, after paying the dividend? A)$63 B)$56 C)$40 D)$48 Answer: AType: Medium
12、Page: 64Response: P = (6*1.05)/(0.15 0.05) = 6312.The required rate of return or the market capitalization rate is estimated as follows: A)Dividend yield + expected rate of growth in dividends B)Dividend yield - expected rate of growth in dividends C)Dividend yield / expected rate of growth in divid
13、ends D)(Dividend yield) * (expected rate of growth in dividends) Answer: AType: DifficultPage: 6513.Mcom Co. is expected to pay a dividend of $4 per share at the end of year one and the dividends are expected to grow at a constant rate of 4% forever. If the current price of the stock is $25 per shar
14、e calculated the required rate of return or the market capitalization rate for the firms stock. A)4% B)16% C)20% D)None of the above. Answer: CType: MediumPage: 65Response: r = (4/25) + 0.04 = 20%14.Dividend growth rate for a stable firm can be estimated as: A)Plow back rate * the return on equity (ROE) B)Plow back rate / the return on equity (ROE) C)Plow back rate +the return on equity (ROE) D)Plow back rate - the return on equity (ROE) Answer: AType: DifficultPage: 6615.MJ Co. pays out 60% of its earnings as dividends. Its return on equity is 20%. What is the stable dividend
