Stock valuation

Shares represent the _________in the company.

• holding

• ownership

• possession

• title

Who gets to vote at a shareholder’s meeting?

• All common stock owners

• Common stock owners who own more than 1% of the company

• Only the company’s managers

• All preferred stock owners

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

• Primary

• Proxy

• Secondary

• Inside

• Initial

Shareholders receive from the company :

• Interest

• Profit

• Commission

• Dividend

Investors are willing to purchase stocks having high P/E ratios because:

• they expect these shares to sell for a lower price

• they expect these shares to offer higher dividend payments

• these shares are accompanied by guaranteed earnings

• they expect these shares to have greater growth opportunities

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.

Preferred stock is similar to a bond in the following way:

• Preferred stock always contains a maturity date.

• Both investments provide a stated income stream.

• Both contain a growth factor similar to common stock.

• Both provide interest payments.

Most preferred stocks have a feature that requires all past unpaid preferred dividend payments be paid before any common stock dividends can be paid. What is the name of this feature?

• participating

• cumulative

• provisional

• convertible

The required return on an equity security is comprised of a:

• dividend yield and ROE

• current yield and a terminal value

• sustainable growth rate and a plowback yield

• dividend yield and a capital gains yield

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