Finance Practice Quiz.

QUESTION

Practice Quiz.
1. The marginal investor is the representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It is the marginal investor who determines a stocks price. True or false?
a. True
b. False
2. Investors expect Bae Corporation to pay a dividend of D1= $1.50 and to grow at a constant rate of 7% per year. The stock sells at a price of $25. What is Baes expected dividend yield?
a. 4.0%
b. 5.0%
c. 6.0%
d. 7.0%
e. 8.0%
3. Shen Computers stock sells for $30 per share, the expected dividend for the coming year is D1= $1.

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Practice Quiz.
1. The marginal investor is the representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It is the marginal investor who determines a stocks price. True or false?
a. True
b. False
2. Investors expect Bae Corporation to pay a dividend of D1= $1.50 and to grow at a constant rate of 7% per year. The stock sells at a price of $25. What is Baes expected dividend yield?
a. 4.0%
b. 5.0%
c. 6.0%
d. 7.0%
e. 8.0%
3. Shen Computers stock sells for $30 per share, the expected dividend for the coming year is D1= $1.20, and investors expect to realize a total return of 12%, which is also the required rate of return. What is Shens expected constant growth rate?
a. 8.0%
b. 8.5%
c. 9.0%
d. 9.5%
e. 10.0%
4. Market equilibrium occurs when the stocks price is greater than its intrinsic value. If the stock market is reasonably efficient, gaps between the stock price and intrinsic value should be quite large and should persist for long periods of time. True or false?
a. True
b. False
5. If Shens managers released information that caused investors to change their expectations to a growth rate of g = 5% from the originally expected 8% growth rate, what would the new stock price be? Assume that rsremains at 12% and D1= $1.20.
a. $14.70
b. $15.47
c. $16.28
d. $17.14
e. $18.00
6. Unless a firm is liquidated or sold to another concern, the cash flows it provides to its stockholders will consist only of a stream of dividends. Therefore, the value of a share of stock must be established as the present value of the stocks expected dividend stream. True or false?
a. True
b. False
7. The termpoison pillrefers to a provision in a firms charter that gives stockholders the right to buy shares of the firm at a greatly reduced price if hostile outsiders buy a specified percentage of the shares. Such provisions are designed to make it difficult for outsiders to oust a firms

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