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The Painted Parlor paid an annual dividend of $1.64 per share last year and just announced that future dividends will increase by 1.3 percent annually.What is the amount of the expected dividend in Year 4?


A) $1.43
B) $1.68
C) $1.46
D) $1.73
E) $1.70

F) B) and E)
G) C) and D)

Correct Answer

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Computing the present value of a growing perpetuity is most similar to computing the current value of which one of the following?


A) Non-dividend-paying stock
B) Stock with a constant dividend
C) Stock with irregular dividends
D) Stock with a constant-growth dividend
E) Stock with growing dividends for a limited period of time

F) D) and E)
G) A) and B)

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The NYSE:


A) presently conducts all of its trading through SuperDOT.
B) is a dealer market.
C) is in the business of attracting order flow.
D) is solely a primary market.
E) is based on a multiple market maker system.

F) All of the above
G) B) and E)

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The dividend yield is defined as:


A) the last annual dividend divided by the current market price per share.
B) the last annual dividend divided by the current book value per share.
C) next year's expected dividend divided by the current market price per share.
D) next year's expected dividend divided by the current book value per share.
E) next year's expected dividend divided by the par value per share.

F) A) and D)
G) C) and D)

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The stream of customer instructions to buy and sell securities is called the:


A) order flow.
B) market maker.
C) execution stream.
D) operations flow.
E) buyer's stream.

F) A) and B)
G) A) and C)

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TMS just paid an annual dividend of $2.84 per share on its stock.The dividends are expected to grow at a constant rate of 1.85 percent per year.If investors require a rate of return of 10.4 percent, what will be the stock price be in Year 11?


A) $41.71
B) $40.64
C) $35.75
D) $41.39
E) $42.57

F) B) and E)
G) C) and D)

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There are three open positions on the board of directors of XYZ Enterprises.The company has 264,000 shares of stock outstanding.Each share is entitled to one vote.How many shares of stock must you own to guarantee your personal election to the board of directors if the firm uses cumulative voting?


A) 82,001 shares
B) 75,001 shares
C) 88,001 shares
D) 72,000 shares
E) 66,001 shares

F) A) and B)
G) A) and C)

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Polar Mechanical Systems will pay an annual dividend of $1.88 per share next year.The company just announced that future dividends will be increasing by 1.2 percent annually.How much are you willing to pay for one share of this stock if you require a rate of return of 9.68 percent?


A) $18.30
B) $22.17
C) $22.94
D) $19.28
E) $22.48

F) A) and B)
G) C) and E)

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JLT is a mature manufacturing firm.The company just paid an annual dividend of $3.62, but management expects to reduce future payouts by 3.5 percent per year, indefinitely.What is this stock worth today at a required return of 12.5 percent?


A) $21.42
B) $21.83
C) $20.24
D) $23.56
E) $20.02

F) A) and D)
G) B) and C)

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Supplemental liquidity providers (SLPs) trade securities on behalf of:


A) their own accounts.
B) the customers of a specific brokerage firm.
C) designated market makers.
D) any stock exchange member.
E) any stock exchange customer.

F) A) and D)
G) A) and E)

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Miller's Hardware has 415,000 shares of stock outstanding with a current market value of $42 a share.You own 84,500 of those shares.Next month, the election will be held to select four new members to the board of directors.The firm uses a cumulative voting system.How much additional money do you need to spend to guarantee that you will be elected to the board assuming that everyone else votes for one of the other candidates?


A) $0
B) $28,518
C) $34,062
D) $62,958
E) $98,910

F) D) and E)
G) B) and D)

Correct Answer

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Most trades on the NYSE are executed:


A) by floor brokers on the exchange floor.
B) independent brokers on the exchange floor.
C) electronically.
D) by designated market makers of the floor of the exchange.
E) bydealers.

F) C) and E)
G) C) and D)

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Braxton's Cleaning Company stock is selling for $32.60 a share based on a rate of return of 13.8 percent.What is the amount of the next annual dividend if the dividends are increasing by 2.4 percent annually?


A) $2.71
B) $3.84
C) $2.78
D) $2.86
E) $3.72

F) A) and E)
G) All of the above

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A particular stock sells for $43.20 share and provides a total return of 11.6 percent.The total return is evenly divided between the capital gains yield and the dividend yield.Assuming a constant dividend growth rate, what is the current dividend per share?


A) $2.24
B) $2.37
C) $2.34
D) $2.51
E) $2.47

F) C) and D)
G) B) and C)

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Car Parts Center recently announced that it will pay annual dividends at the end of the next two years of $ 1.20 and $1.35 per share, respectively.Then, in Year 5 it plans to pay a final dividend of $11.75 a share before closing its doors permanently.At a required return of 17 percent, what should this stock sell for today?


A) $1.18
B) $14.14
C) $7.37
D) $11.27
E) $10.64

F) A) and D)
G) B) and E)

Correct Answer

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The capital gains yield equals which one of the following?


A) Total yield
B) Required rate of return
C) Market rate of return
D) Dividend yield
E) Dividend growth rate

F) A) and D)
G) A) and C)

Correct Answer

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A stock has paid dividends of $1.70, $1.85, $2.00, $2.20, and $2.50 over the past five years, respectively.What is the average capital gains yield?


A) 8.86 percent
B) 3.24 percent
C) 9.45 percent
D) 5.34 percent
E) 10.14 percent

F) C) and E)
G) A) and B)

Correct Answer

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Ground Chuck Processing just paid its annual dividend of $1.25 per share.The firm recently announced that all future dividends will be increased by 3 percent annually.What is one share of this stock worth to you if you require a rate of return of 11.5 percent?


A) $14.89
B) $15.92
C) $15.15
D) $13.52
E) $15.05

F) B) and C)
G) A) and E)

Correct Answer

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Dixie Mart plans to pay dividends of $1.36, $1.15, $1.35, and $.40 at the end of the next four years, respectively.After that, the company will be sold and shareholders are expected to receive $82.40 per share in Year 6 when the sale should be finalized.If the required return is 11.4 percent, what is the current value of one share of this stock?


A) $47.71
B) $51.87
C) $46.50
D) $51.08
E) $47.29

F) None of the above
G) D) and E)

Correct Answer

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The required return on Mountain Brook stock is 13.8 percent and the dividend growth rate is 3.64 percent.The stock is currently selling for $32.80 a share.What is the dividend yield?


A) 10.16 percent
B) 8.93 percent
C) 11.75 percent
D) 10.50 percent
E) 13.36 percent

F) All of the above
G) A) and E)

Correct Answer

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