Question 1

Which of the following pairs of stock categories are mutually exclusive?

Accepted Answer

The answer of Which of the following pairs of stock...

Question 2

If a stock symbol contains a period, this means

Accepted Answer

A period in a stock symbol typically indicates that there is more than one class of stock for the company.

Question 3

The correct sequence in the dividend payment chronology is the

Accepted Answer

The correct sequence is: date of declaration, ex-dividend date, date of record, and date of payment. The declaration date is when the dividend is announced, the ex-dividend date is when the stock starts trading without the dividend, the record date is when shareholders must be on record to receive the dividend, and the payment date is when the dividend is actually paid.

Question 4

A company just paid a dividend of $2.00 per share. Five years ago, the company paid a dividend of $1.00 per share. What is the average growth rate in dividends?

Accepted Answer

The answer of A company just paid a dividend of...

Question 5

A company just paid a dividend of $3.00 per share. Four years ago, the company paid a dividend of $2.00 per share. You expect the dividend payment to continue growing at this same rate indefinitely into the future. If the required rate of return on equity is 14% per year, what would be a fair price for this stock today?

Accepted Answer

The answer of A company just paid a dividend of...

Question 6

A company plans to pay a dividend of $2.00 next year and expects the dividend will grow 6% per year indefinitely into the future. If the required rate of return on equity is 12%, what would be a fair price for this stock today?

Accepted Answer

The fair price of the stock can be calculated using the Gordon Growth Model (Dividend Discount Model): P = D1 / (r - g), where D1 is the dividend next year ($2.00), r is the required rate of return (12% or 0.12), and g is the growth rate (6% or 0.06). So, P = 2 / (0.12 - 0.06) = 33.33.

Question 7

A company just paid a dividend of $1.50 and expects the dividend will grow 7% per year indefinitely into the future. If the required rate of return on equity is 13%, what would be a fair price for this stock today?

Accepted Answer

The answer of A company just paid a dividend of...

Question 8

A company plans to pay a dividend of $1.40 next year, $1.60 the following year, and $1.80 three years from now. Thereafter, it is expected that the dividend will grow 5% per year indefinitely into the future. If the required rate of return is 14%, what would be a fair price for this stock today?

Accepted Answer

The answer of A company plans to pay a dividend...

Quiz 9: Picking the Equity Players

Which of the following pairs of stock categories are mutually exclusive?

If a stock symbol contains a period, this means

The correct sequence in the dividend payment chronology is the

A company just paid a dividend of $2.00 per share. Five years ago, the company paid a dividend of $1.00 per share. What is the average growth rate in dividends?

A company plans to pay a dividend of $2.00 next year and expects the dividend will grow 6% per year indefinitely into the future. If the required rate of return on equity is 12%, what would be a fair price for this stock today?

A company just paid a dividend of $1.50 and expects the dividend will grow 7% per year indefinitely into the future. If the required rate of return on equity is 13%, what would be a fair price for this stock today?

A company plans to pay a dividend of $1.40 next year, $1.60 the following year, and $1.80 three years from now. Thereafter, it is expected that the dividend will grow 5% per year indefinitely into the future. If the required rate of return is 14%, what would be a fair price for this stock today?