The Bike Store orders $2000 worth of supplies every 30 days. If they take advantage of the 3/10 net 30 discount offered by their supplier, how much would they save over the year? Assume a 360-day year. What will be an ideal response? ANSWER 3% × 2000 = $60 would be saved on […]
Date: September 19th, 2020
The term “preferred” comes from the fact that preferred shareholders receive all past (if cumulative) and present dividends before common shareholders can receive any cash dividends—in other words, their dividend claims are preferred over common stock dividend claims. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
The required return on a security is 10%, the risk-free rate is 5%, and the return on the market is 14%. What is the beta of the firm? A) 0.14 B) 0.55 C) 0.83 D) 1.00 E) 1.40 ANSWER B
Date: September 19th, 2020
An increase in a firm’s market risk should be reflected in what part(s) of the Gordon growth model? A) The dividend growth rate B) The required return C) Next year’s dividend ANSWER B
Date: September 19th, 2020
Crane Industries Inc. has outstanding borrowings that include preferred stock. One of these borrowings is (nonconvertible) preferred stock (cumulative) with a par value of $250 and an annual dividend rate of 8.25%. This preferred stock is currently selling for $260 per share. What is the yield or return on this nonconvertible preferred stock? What will […]
Date: September 19th, 2020
The risk-free rate is 7 percent, the expected return on the market is 10 percent, and the expected return on Security J is 13 percent. What is the beta of Security J? A) 0.5 B) 1.0 C) 1.5 D) 2.0 E) 2.5 ANSWER D
Date: September 19th, 2020
What is the required return from Truman Planned Community stock if its beta is 1.1, the return on the market portfolio is 12%, the risk free rate is 3%, next year’s dividend will be $1.25 per share and dividends are expected to grow 5% per year? A) $17.86 per share B) $62.50 per share C) […]
Date: September 19th, 2020
Which of the following factors determines the amount that a firm would have invested in accounts receivable? A) the volume of sales B) the percentage of credit sales to total sales C) the terms of sale D) collection efforts E) All of the above ANSWER E
Date: September 19th, 2020
Sampson Supply Inc. has outstanding borrowings that include preferred stock. One of these borrowings is (nonconvertible) preferred stock (cumulative) with a par value of $150 and an annual dividend rate of 4.50%. This preferred stock is currently selling for $175 per share. What is the yield or return on this nonconvertible preferred stock? What will […]
Date: September 19th, 2020
Strong-form efficient markets theory proclaims that ________. A) one can chart historical stock prices to predict future stock prices such that you can identify mispriced stocks and routinely outperform the market B) one can exploit publicly available news or financial statement information to routinely outperform the market C) current prices reflect the price and volume […]
Date: September 19th, 2020
