Stock Valuation

Which one of the following types of securities has no priority in a bankruptcy proceeding?

• Convertible bond

  
  

  
  

• Senior debt

• Common stock

• Preferred stock

• Straight bond

Kate could not attend the last shareholders meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kate's shares were voted?

• Straight

• Cumulative

• Consent-form

• Proxy

• In absentia

What is the market called that allows shareholders to resell their shares to other investors?

• Primary

• Proxy

• Secondary

• Inside

• Initial

The Pancake House pays a constant annual dividend of RM1.25 per share. How much are you willing to pay for one share if you require a 15 percent rate of return?

• RM7.86

• RM8.33

• RM10.87

• RM11.04

• RM11.38

Healthy Foods just paid its annual dividend of RM1.45 a share. The firm recently announced that all future dividends will be increased by 2.8 percent annually. What is one share of this stock worth to you if you require a 14 percent rate of return?

• RM12.56

• RM12.95

• RM13.31

• RM13.68

• RM14.07

Plastics, Inc. will pay an annual dividend of RM1.85 next year. The company just announced that future dividends will be increasing by 2.25 percent annually. How much are you willing to pay for one share of this stock if you require a 16 percent return?

• RM13.45

• RM13.61

• RM13.76

• RM14.02

• RM14.45

Company X has a beta of of 1,45. The expected risk-free rate of interest is 2,5% and the expected return on the market as a whole is 10%. Using the CAPM, what is ABC's expected return?

• 13,3%

• 13,375%

• 18,75%

• 12,25%

Which statement about common stockholders is incorrect?

• Common stockholders have a residual claim on the firm’s cash flows.

• Common stockholders have first claim on the firm’s assets during bankruptcy

• Common stockholders have a voting right.

• Common stockholders are the ultimate owners of a corporation.

Assume that the dividend on Central Power Company's $3.25 preferred stock issue is paid annually at the end

of the year. Determine the price of this issue if its return is 12%.

• $3.25

• $39

• $12

• $27.08

Stock has growth rate 8%. just received an annual $3.24/share dividend per share. Required return is 15%

• $50

• $55

• $45

• no correct answer