# BUSINESS

23. **Buying Stock with Commission** At your discount brokerage firm, it costs $8.50 per stock trade. How much money do you need to buy 200 shares of Apple (AAPL), which trades at $171.54?

A. $32,608.00

B. $34,299.50

C. $34,316.50

D. $36,008.00

24. **Selling Stock with Commissions** At your full-service brokerage firm, it costs $110 per stock trade. How much money do you receive after selling 100 shares of Time Warner, Inc. (TMX), which trades at $22.62?

A. $2,152.00

B. $2,262.00

C. $2,372.00

D. $2,388.20

25. **Selling Stock with Commissions** At your full-service brokerage firm, it costs $120 per stock trade. How much money do you receive after selling 200 shares of Ralph Lauren (RL), which trades at $85.13?

A. $16,546.00

B. $16,906.00

C. $17,026.00

D. $17,146.00

26. **Buying Stock with a Market Order** You would like to buy shares of International Business Machines (IBM). The current bid and ask quotes are $96.17 and $96.24, respectively. You place a market buy-order for 100 shares that executes at these quoted prices. How much money did it cost to buy these shares?

A. $7.00

B. $9,617.00

C. $9,624.00

D. $19,241.00

27. **Buying Stock with a Market Order** You would like to buy shares of Nokia (NOK). The current bid and ask quotes are $20.13 and $20.15, respectively. You place a market buy-order for 300 shares that executes at these quoted prices. How much money did it cost to buy these shares?

A. $6.00

B. $6,039.00

C. $6,045.00

D. $12,084.00

28. **Selling Stock with a Limit Order** You would like to sell 100 shares of Pfizer, Inc. (PFE). The current bid and ask quotes are $27.22 and $27.25, respectively. You place a limit sell-order at $27.24. If the trade executes, how much money do you receive from the buyer?

A. $2,722.00

B. $2,724.00

C. $2,725.00

D. $5,446.00

29. **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. $38,464.00

B. $38,468.00

C. $38,480.00

D. $38,496.00

30. **Value of a Preferred Stock** If a preferred stock from Pfizer Inc. (PFE) pays $3.00 in annual dividends, and the required return on the preferred stock is 7 percent, what’s the value of the stock?

A. $0.21

B. $0.43

C. $21.00

D. $42.86

31. **Value of a Preferred Stock** If a preferred stock from Ecology and Environment, Inc. (EEI) pays $2.50 in annual dividends, and the required return on the preferred stock is 5.8 percent, what’s the value of the stock?

A. $0.15

B. $0.43

C. $14.50

D. $43.10

32. **P/E Ratio and Stock Price** International Business Machines (IBM) has earnings per share of $6.85 and a P/E ratio of 15.19. What is the stock price?

A. $0.45

B. $2.22

C. $45.09

D. $104.05

33. **P/E Ratio and Stock Price** Pfizer, Inc. (PFE) has earnings per share of $2.09 and a P/E ratio of 11.02. What is the stock price?

A. $0.19

B. $5.27

C. $18.97

D. $23.03

34. **P/E Ratio and Stock Price** Ralph Lauren (RL) has earnings per share of $3.85 and a P/E ratio of 17.37. What is the stock price?

A. $0.22

B. $4.51

C. $22.16

D. $66.87

35. **Value of Dividends and Future Price** A firm is expected to pay a dividend of $2.00 next year and $2.14 the following year. Financial analysts believe the stock will be at their target price of $75.00 in two years. Compute the value of this stock with a required return of 10 percent.

A. $65.40

B. $66.67

C. $65.57

D. $79.14

36. **Value of Dividends and Future Price** A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year. Financial analysts believe the stock will be at their target price of $80.00 in two years. Compute the value of this stock with a required return of 13 percent.

A. $50.00

B. $67.52

C. $67.82

D. $86.21

37. **Dividend Growth** Annual dividends of Wal-Mart Stores (WMT) grew from $0.23 in 2000 to $0.83 in 2007. What was the annual growth rate?

A. 2.61%

B. 20.12%

C. 37.29%

D. 260.87%

38. **Dividend Growth** Annual dividends of Pfizer, Inc. (PFE) grew from $0.38 in 2000 to $1.15 in 2007. What was the annual growth rate?

A. 2.02%

B. 17.14%

C. 28.95%

D. 202.63%

39. **Value a Constant Growth Stock** Financial analysts forecast Best Buy Company (BBY) growth for the future to be 13 percent. Their recent dividend was $0.49. What is the value of their stock when the required rate of return is 14.13 percent?

A. $3.92

B. $4.90

C. $43.36

D. $49.00

40. **Value a Constant Growth Stock** Financial analysts forecast Target Corp (TGT) growth for the future to be 11 percent. Their recent dividend was $0.52. What is the value of their stock when the required rate of return is 11.89 percent?

A. $5.25

B. $6.48

C. $58.43

D. $64.85

41. **Expected Return** American Eagle Outfitters (AEO) recently paid a $0.38 dividend. The dividend is expected to grow at a 15.5 percent rate. At the current stock price of $24.07, what is the return shareholders are expecting?

A. 15.50%

B. 15.52%

C. 17.08%

D. 17.32%

42. **Expected Return** The Buckle (BKE) recently paid a $0.90 dividend. The dividend is expected to grow at a 19 percent rate. At the current stock price of $43.17, what is the return shareholders are expecting?

A. 19.00%

B. 19.02%

C. 21.48%

D. 22.74%

43. **Expected Return** Home Depot (HD) recently paid a $0.90 dividend. The dividend is expected to grow at a 17 percent rate. At the current stock price of $33.08, what is the return shareholders are expecting?

A. 2.70%

B. 17.03%

C. 17.18%

D. 20.18%

44. **Dividend Initiation and Stock Value** A firm does not pay a dividend. It is expected to pay its first dividend of $0.10 per share in 2 years. This dividend will grow at 11 percent indefinitely. Using a 13 percent discount rate, compute the value of this stock.

A. $4.42

B. $4.59

C. $5.43

D. $7.21

45. **Dividend Initiation and Stock Value** A firm does not pay a dividend. It is expected to pay its first dividend of $0.15 per share in 3 years. This dividend will grow at 9 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock.

A. $12.28

B. $12.40

C. $16.35

D. $16.50

46. **P/E Ratio Model and Future Price** Walmart (WMT) recently earned a profit of $3.13 per share and has a P/E ratio of 14.22. The dividend has been growing at a 12.5 percent rate over the past few years. If this growth continues, what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio *declined* to 10 in five years.

A. $6.08, $5.04 respectively

B. $72.22, $50.40 respectively

C. $80.20, $56.40 respectively

D. $86.46, $60.80 respectively