Question

is expressed on an annualized per year basis it is called the 11) When the total return on an investment is expressed on an annualize a) annual percentage yield. b) annual percentage rate. e) capital gains yield. d) dividend yield. e) holding period return. 12) One year ago, you purchased 100 shares of Southern Foods common stock for $41.60 a share. Today, you sold your shares for $39.70 a share. During this past year, the stock paid $1.40 in dividends per share. What is your dividend yield on this investment? a) 3.30 percent 5 3.37 percent 3.44 percent d) 3.53 percent e) 3.61 percent 13) What is the purpose of a margin call? a) to let you know the amount of funds that are now available for you to borrow b) to advise you that the interest rate on your loan has changed c) to inform you that your margin loan is due and payable d) to demand funds to increase your margin position e) to remind you of the upcoming monthly payment due on your margin loan 14) The method of valuing a stock based on the present value of the future income derived from that stock is called: a) technical analysis. b) the dividend discount model. c) constant valuation. d) the basic stock valuation method. e) compound dividend analysis. 15) Growth stocks are frequently described as having which one of the following characteristics? a) high dividends b) a value orientation c) low cash flows per share d) low retention ratios e) high P/E ratios 16) Which one of the following is the primary flaw of a price-weighted index? a) Price-weighted indexes ignore stock splits which affect stock prices. b) Only a small number of stocks can be included in a price-weighted index. ©)) The index can only be computed once the trading day is over. d) The effect a company has on the index is dependent solely on the price per share. e) All of the above statements are true.

Answer 1

11. E holding period return

12. B 3.37% ($1.4 / $41.60 *100)

13. D to demand funds to increase your margin position

14. B   dividend discount model

15. E   high P/E ratios

16. D