兹维博迪金融学第二版试题库9TB.docx

兹维博迪金融学第二版试题库9TB.docx

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兹维博迪金融学第二版试题库9TB

ChapterNine

ValuationofCommonStocks

Thischaptercontains47multiplechoicequestions,17shortproblems,and9longerproblems.

MultipleChoice

1.Inaquotelistingofstocks,the________isdefinedastheannualizeddollardividenddividedbythestock’sprice,andisusuallyexpressedasapercentage.

（a）cashdividend

（b）dividendpayout

（c）dividendcoverage

（d）dividendyield

Answer:

（d）

2.Accordingtothediscounted-dividendmodel,thepriceofashareofstockisthe________valueofallexpected________dividendspershare,discountedatthemarketcapitalizationrate.

（a）present;current

（b）present;future

（c）future;future

（d）future;current

Answer:

（b）

3.Thevalueofcommonstockisdeterminedbywhichofthefollowingexpectedcashflows?

（a）dividendsandinterestpayments

（b）dividendsandmaturityvalueofstock

（c）dividendsandnetcashflowsfromoperationsofthefirm

（d）interestpaymentsandmaturityvalue

Answer:

（c）

4.

The________istheexpectedrateofreturnthatinvestorsrequireinordertobewillingtoinvestinthestock.

（a）marketcapitalizationrate

（b）risk-adjusteddiscountrate

（c）costofdebt

（d）aandb

Answer:

（d）

5.The________ofdividendsisthemostbasicassumptionunderlyingthediscounteddividendmodel.

（a）industryaverage

（b）non-constantgrowth

（c）constantgrowth

（d）variability

Answer:

（c）

6.BHMstockisexpectedtopayadividendof$2.50ayearfromnow,anditsdividendsareexpectedtogrowby6%peryearthereafter.WhatisthepriceofaBHMshareifthemarketcapitalizationrateis7%peryear?

（a）$250.00

（b）$192.31

（c）$25.00

（d）$19.23

Answer:

（c）

7.IOUstockisexpectedtopayadividendof$1.67ayearfromnow,anditsdividendsarenotexpectedtogrowintheforeseeablefuture.Ifthemarketcapitalizationrateis7%,whatisthecurrentpriceofashareofIOUstock?

（a）$11.69

（b）$23.86

（c）$116.90

（d）$238.60

Answer:

（b）

8.

GMATSstockiscurrentlysellingfor$34.50ashare.Thecurrentdividendforthisstockis$1.60anddividendsareexpectedtogrowataconstantrateof10%peryearthereafter.WhatmustbethemarketcapitalizationrateforashareofGMATSstock?

（a）4.90%

（b）5.36%

（c）14.64%

（d）15.10%

Answer:

（d）

9.Avacorstockisexpectedtopayadividendof$1.89ayearfromnow,anditsdividendsareexpectedtogrowataconstantrateof5%peryearthereafter.Ifthemarketcapitalizationrateis14%peryear,whatisthecurrentpriceofashareofAvacorstock?

（a）$13.50

（b）$18.90

（c）$21.00

（d）$37.80

Answer:

（c）

10.GRITOstockiscurrentlysellingfor$46.10ashare.Ifthecompanyisexpectedtopayadividendof$5.60ayearfromnowanddividendsarenotexpectedtogrowthereafter,whatisthemarketcapitalizationrateforashareofGRITOstock?

（a）7.56%

（b）8.23%

（c）10.50%

（d）12.15%

Answer:

（d）

11.IntheDDMmodel,ifD1andkareheldconstant,whatwillhappentothepriceofastockiftheconstantgrowthrategetshigher?

（a）thepriceofthestockwillbehigher

（b）thepriceofthestockwillholdconstant

（c）thepriceofthestockwillbelower

（d）itcannotbedeterminedfromtheinformationgiven

Answer:

（a）

12.

Therelationbetweenearningsanddividendsinanyperiodis________.

（a）Dividends=Earnings/NetNewInvestment

（b）Dividends=EarningsxNetNewInvestment

（c）Dividends=Earnings+NetNewInvestment

（d）Dividends=Earnings–NetNewInvestment

Answer:

（d）

13.ConsiderafirmcalledNowhereCorporation,whoseearningspershareare$12.Thefirminvestsanamounteachyearthatisjustsufficienttoreplacetheproductioncapacitythatiswearingout,andsothenewinvestmentiszero.Thefirmpaysoutallitsearningsasdividends.CalculatethepriceofashareofNowhereCorporationstock,givethatk=14%.

（a）$168.00

（b）$166.67

（c）$85.71

（d）$82.40

Answer:

（c）

14.ConsiderafirmcalledSureBetCorporation.SureBetreinvests55%ofitsearningseachyearintonewinvestmentsthatearnarateofreturnof17%peryear.Currently,SureBetCorporationhasearningspershareof$12andpaysout45%or$5.40asdividends.Calculatethegrowthrateofearningsanddividends.

（a）7.65%

（b）8.50%

（c）9.35%

（d）24.75%

Answer:

（c）

15.Whataddsvaluetothecurrentpriceofashareofstockis________.

（a）growthperse

（b）taxadvantages

（c）investmentopportunitiesthatearnratesofreturn>k

（d）alloftheabove

Answer:

（c）

16.

InordertoevaluatethestockofBeltranInc.,ananalystusestheconstantgrowthdiscounteddividendmodel.Expectedearningsof$12pershareisassumed,asareanearningsretentionrateof70%andanexpectedrateofreturnonfutureinvestmentsof17%peryear.Ifthemarketcapitalizationrateis14%peryear,calculatethepriceforashareofBeltranstock.

（a）$171.43

（b）$367.35

（c）$400.00

（d）$857.14

Answer:

（a）

17.InordertoevaluatethestockofTheRendell-VineCorporation,ananalystusestheconstantgrowthdiscounteddividendmodel.Expectedearningsof$12pershareisassumed,asareanearningsretentionrateof70%andanexpectedrateofreturnonfutureinvestmentsof17%peryear.Ifthemarketcapitalizationrateis14%peryear,whatistheimpliednetpresentvalueoffutureinvestments?

（a）$314.29

（b）$281.64

（c）$171.43

（d）$85.72

Answer:

（d）

18.InordertoevaluatethestockofToys’R’Me,ananalystusestheconstantgrowthdiscounteddividendmodel.Expectedearningsof$14pershareisassumed,asareanearningsretentionrateof60%andanexpectedrateofreturnonfutureinvestmentsof17%peryear.Ifthemarketcapitalizationrateis15%peryear,whatistheimpliednetpresentvalueoffutureinvestments?

（a）$23.34

（b）$70.00

（c）$93.34

（d）$116.67

Answer:

（a）

19.FirmswithconsistentlyhighP/Emultiplesareinterpretedtohaveeitherrelatively________marketcapitalizationratesorrelatively________presentvalueofvalue-addedinvestments.

（a）low;low

（b）high;high

（c）high;low

（d）low;high

Answer:

（d）

20.Ina“frictionless”financialenvironment,theshareholderswealthis________thedividendpolicythefirmadopts.

（a）increasedby

（b）decreasedby

（c）notaffectedby

（d）determinedby

Answer:

（c）

21.Ina________thecompanypayscashtobuysharesofitsstockinthestockmarket,therebyreducingthenumberofsharesoutstanding.

（a）cashdividend

（b）sharerepurchase

（c）stocksplit

（d）aandb

Answer:

（b）

22.Stocksplitsandstockdividends________thenumberofsharesofstockoutstanding.

（a）decrease

（b）donotalter

（c）increase

（d）aorb

Answer:

（c）

23.SureBetCorporationhastotalassetswithamarketvalueof$15million:

$3millionincashand$12millioninotherassets.Themarketvalueofitsdebtis$3million;ofitsequity$12million.Thereare1,000,000sharesofSureBetcommonstockoutstanding,eachwithamarketpriceof$12.IfSureBetdistributesacashdividendof$1.50pershare,themarketvalueofitsassetsandofitsequity________by________.

（a）increases;$1.5million

（b）increases;$10.5million

（c）decreases;$1.5million

（d）decreases;$10.5million

Answer:

（c）

24.

SureBetCorporationhastotalassetswithamarketvalueof$15million:

$3millionincashand$12millioninotherassets.Themarketvalueofitsdebtis$3million;ofitsequity$12million.Thereare1,000,000sharesofSureBetcommonstockoutstanding,eachwithamarketpriceof$12.IfSureBetrepurchasessharesworth$2.4million,theresultingnumberofsharesoutstandingis________,withapricepershareof________.

（a）200,000;$15

（b）200,000;$12

（c）800,000;$15

（d）800,000;$12

Answer:

（d）

25.“Frictions”thatcancauseafirm’sdividendpolicytohaveaneffectonthewealthofshareholdersinclude:

（a）regulations

（b）taxes

（c）costofexternalfinance

（d）alloftheabove

Answer:

（d）

26.Outsideinvestorsmayinterpretanincreaseinacorporation’scashdividendas________sign.

（a）apositivesign

（b）anegativesign

（c）anindifferentsign

（d）borc

Answer:

（a）

27.Fromtheperspectiveofashareholderwithregardtopersonaltaxation,itisalways________forthecorporationtopayoutcashby________.

（a）better;cashdividends

（b）worse;cashdividends

（c）worse;sharerepurchases

（d）itvariesaccordingtothesituation

Answer:

（b）

28.

Anincreaseinacorporation’scashdividendismostlikelyto________.

（a）decreasethepriceofitsstock

（b）increasethepriceofitsstock

（c）havenoimpactonthepriceofitsstock

（d）decreasetradingactivityofitsstock

Answer:

（b）

29.Raisingcashbyissuingnewstockis________tothecorporationthanraisingcashbyforegoingthepaymentsofdividends.

（a）islesscostly

（b）ismorecostly

（c）isnodifferent

（d）justascostly

Answer:

（b）

30.GoughFraserisconsideringpurchasingthestockofASIOACompanies,whichheplanstoholdindefinitely.ASIOAjustpaidanannualdividendof$2.50andthepriceofthestockis$48pershare.Theearningsanddividendsofthecompanyareexpectedtogrowforeveratarateof6percentperyear.WhatannualrateofreturndoesGoughexpectonhisinvestment?

（a）10.58%

（b）11.21%

（c）11.52%

（d）12.46%

Answer:

（c）

31.BeazleyInc.justpaidadividendof$3.00pershare.Thisdividendisexpectedtogrowatasupernormalrateof15percentperyearforthenexttwoyears.Itisthenexpectedtogrowatarateof6percentperyearforever.TheappropriatediscountrateforBeazley’sstockis17percent.Whatisthepriceofthestock?

（a）$17.64

（b）$27.27

（c）$33.78

（d）$46.15

Answer:

（c）

32.

BeazleyCorporationwouldliketoraise$100,000,000byissuingpreferredstock.Thepreferredstockwillhaveaparvalueof$1,000pershareandpayadividendof$72perye