ECONOMICS

14. We can estimate a stock’s value by
A. using the book value of the total stockholder equity section.
B. discounting the future dividends and future stock price appreciation.
C. compounding the past dividends and past stock price appreciation.
D. using the book value of the total assets divided by the number of shares outstanding.

 

15. Many companies grow very fast at first, but slower future growth can be expected. Such companies are called
A. Fortune 500 companies
B. Blue Chip companies
C. Variable Growth Rate firms
D. Constant Growth Rate firms

 

16. We often use the P/E ratio model with the firm’s growth rate to estimate
A. required rates of return.
B. inflation.
C. a stock’s current price.
D. a stock’s future price.

 

17. Value stocks usually have
A. low P/E ratios and high growth rates.
B. high P/E ratios and low growth rates.
C. low P/E ratios and low growth rates.
D. high P/E ratios and high growth rates.

 

18. Dividend yield is defined as
A. the last four quarters of dividend income expressed as a percentage of the par value of the stock.
B. the last four quarters of dividend income expressed as a percentage of the current stock price.
C. the last dividend paid expressed as a percentage of the current stock price.
D. the next dividend to be paid expressed as a percentage of the current stock price.

 

19. The size of the firm measured as the current stock price multiplied by the number of shares outstanding is referred to as the firm’s
A. market capitalization.
B. book value.
C. market makers.
D. constant growth model.

 

20. Stock Index Performance On November 26, 2007, The Dow Jones Industrial Average closed at 12,743.40, which was down 237.44 that day. What was the return (in percent) of the stock market that day?
A. -.02%
B. +.02%
C. -1.83
D. +1.83%

 

21. Stock Index Performance On November 27, 2007, The Dow Jones Industrial Average closed at 12,958.44, which was up 215.04 that day. What was the return (in percent) of the stock market that day?
A. -.017%
B. +.017%
C. -1.69%
D. +1.69

 

22. Buying Stock with Commission At your discount brokerage firm, it costs $9.95 per stock trade. How much money do you need to buy 100 shares of Ralph Lauren (RL), which trades at $85.13?
A. $8,503.05
B. $8,503.00
C. $8,522.95
D. $9,508.00

 

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

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