# FINANCE

68. 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

69. Consider a firm that had been priced using a 12 percent growth rate and a 16 percent required return. The firm recently paid a \$5.00 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12.5 percent rate. How much should the stock price change (in dollars and percentage)?
A. \$21.50; 13.72%
B. \$21.50; 16.14%
C. \$20.71; 14.79%
D. \$20.71; 19.93%

70. Suppose that a firm’s recent earnings per share and dividend per share are \$2.50 and \$1.00, respectively. Both are expected to grow at 5 percent. However, the firm’s current P/E ratio of 23 seems high for this growth rate. The P/E ratio is expected to fall to 19 within five years. Compute a value for this stock. Assume a 10 percent required rate.
A. \$36.19
B. \$38.86
C. \$40.31
D. \$42.00

71. 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%?
A. \$28.00
B. \$29.14
C. \$17.82
D. \$15.52

72. 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%?
A. \$28.17
B. \$24.25
C. \$17.42
D. \$15.53

73. To list a stock on the NYSE, a company must meet minimum requirements that include all of the following except ____________________.
A. Firm size
B. Total number of stockholders
D. P/E Ratio

74. Which of the following is an electronic stock market without a physical trading floor?
A. American Stock Exchange
B. Mercantile Exchange
C. New York Stock Exchange
D. Nasdaq Stock Market

75. Individuals who use their own stock inventory and capital to buy and sell the stocks they represent are called _________________.
A. Market makers
B. Brokers
C. Investors
D. None of these.

76. All of the following are stock market indices except _________________.
A. Standard & Poor’s 500 Index
B. Dow Jones Industrial Average
C. Nasdaq Composite Index
D. Mercantile 1000

77. GEN has 10 million shares outstanding and a stock price of \$89.25. What is GEN’s market capitalization?
A. \$89,250,000,000
B. \$89,250,000
C. \$892,500,000
D. \$892,500

78. GEN has 1 million shares outstanding and a P/E ratio of 12. Its earnings per share is \$2.00 What is GEN’s market capitalization?
A. \$24,000,000
B. \$12,000,000
C. \$2,000,000
D. \$96,000,000

79. GEN has 3 million shares outstanding and a P/E ratio of 15. Its earnings per share is \$3.00 What is GEN’s market capitalization?
A. \$45,000,000
B. \$135,000,000
C. \$112,000,000
D. \$9,000,000

80. ABC has a net profit margin of 3.3% on Sales of \$10,000,000. The firm has 50,000 shares outstanding. If the firm’s P/E is 19 times, how much is the stock selling for?
A. \$41.72
B. \$34.96
C. \$125.40
D. \$99.16

81. ABC has a net profit margin of 4.3% on Sales of \$12,000,000. The firm has 250,000 shares outstanding. If the firm’s P/E is 16 times, how much is the stock selling for?
A. \$41.72
B. \$35.96
C. \$25.40
D. \$33.02

82. Which of the following indices best reflects the ten sectors of the economy?
A. Nasdaq Composite
B. Dow Jones Industrial Average
C. Standard & Poor’s 500
D. None of these.

83. Studies of investor psychology have discovered that ____________.
A. investors tend to trade too much
B. investors tend to sell their winners too soon
C. investors tend to become overconfident
D. All of these.

84. Sally has researched GLE and wants to pay no more than \$50 for the stock. Currently, GLE is trading in the market for \$54. Sally would be best served to:
A. buy using a limit order.
B. buy using a market order.
D. None of these.

85. Which of the following is incorrect with respect to limit orders?
A. They can be used only to buy stock.
B. If the current quote does not meet the price cited in the limit order, the trade is not executed.
C. The advantage of the limit order is that the investor makes the trade at the desired price.
D. The disadvantage of the limit order is that the trade might not be executed at all.

86. Which of the following is incorrect with respect to preferred stock?
A. Preferred stock is largely owned by other companies rather than individual investors.
B. Preferred stock takes preference over common stock in bankruptcy proceedings.
C. Preferred stock dividends do not grow.
D. All of these statements are correct.

87. JUJU’s dividend next year is expected to be \$1.50. It is trading at \$45 and is expected to grow at 9% per year. What is JUJU’s dividend yield and capital gain?
A. 1.5%; 6%
B. 9%; 3.33%
C. 3.33%; 9%
D. 6%; 1.5%

88. 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?
A. 2.5%; 6%
B. 12.22%; 4%
C. 4%; 12.22%
D. 6%; 2.5%

89. Value stocks are _________________________.
A. stocks that are expected to exhibit high growth
B. stocks that have low P/E ratios and are selling at a bargain price
C. stocks that have high valuation ratios, such as P/E
D. None of these.

90. A firm does not pay any dividends at this point in time. Which valuation method should be used on this stock?
A. Residual Claimant Model
B. Variable Growth Model
C. P/E Ratio Model
D. Capital Gain Model

91. Which of the following statements is incorrect?
A. Trading at the New York Stock Exchange and the American Stock Exchange are done by open outcry.
B. Dealers create market liquidity in the Nasdaq’s electronic market.
C. The Dow Jones Industrial Average includes 35 of the largest companies in the U.S.
D. The Nasdaq contains many very large technology firms.

92. 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. 4.73%
B. 7.25%
C. 5.91%
D. 6.14%

93. 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. 4.73%
B. 5.92%
C. 6.00%
D. 7.29%

94. A firm’s recent dividend was \$2.00 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. 4.73%
B. 5.92%
C. 6.00%
D. 5.77%

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