Homework Answers
Current Stock price = Expected dividend/(Required return – Growth rate)
Current dividend will not affect stock price.
Hence, correct option is d. I,II, and IV only”
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Which of the following affect current stock price? 1. Dividend growth rate II. Required return III. Current dividend...
Which of the following affect current stock price?  
Which of the following affect current stock price? I. Dividend growth rate II. Required return III. Current dividend IV. Expected dividend next year
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock pri...
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock price at any point in time. III. requires the required return to be higher than the growth rate. IV. assumes that dividends increase by a constant amount forever. V. none of the above is correct Multiple Choice 0 II, and IV only 0 V only 0 1, I, II, and IV only 0 Ill only 0 In order to estimate...
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1....
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return...
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for...
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for ABC Corp.: 1. Its dividend yield to decrease Its dividend yield to increase Its capital gains yield to decrease Its capital gains yield to increase III. IV. Select one: a. ll only O b. II and IV only O c. I and III only d. I only
In accordance with the dividend growth model, an increase in the following except will raise the...
In accordance with the dividend growth model, an increase in the following except will raise the current value of a stock. 1. dividend amount II. investor's required return III. dividend growth rate Multiple Choice 0 I and Il only 0 O and Ill only 0 I only 0 Ill and III 0 ll only Which of the following is/are true for the average accounting return method of project analysis? 1. does not need a cutoff rate II. ignores time value...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value B) the expected rate of rectum equals or exceeds the required turn C) the capital gains rate is less than the required rumande dividends are paid D) the market price is greater than the justified price Answer 2) Which of the following variables used in determining a stock's intrinsic als can be known with the greatest level of confidence A] future carmings B) expected...
1.Golf World has a constant dividend growth rate of 10% and has just paid a dividend (D0) of $5.00. If the required rate...
1.Golf World has a constant dividend growth rate of 10% and has just paid a dividend (D0) of $5.00. If the required rate of return is 15%, what will the stock sell for one year from now? A) $90.00 B) $95.50 C) $ 100.00 D) $121.00 2.The dividend yield on AAA’s common stock is 5%. The company just paid a $4 dividend (D0), which will be $4.40 next year. The dividend growth rate (g) is expected to remain constant at...
1. Which of the following is (are) feature(s) of preferred stock? I. It generally has a...
1. Which of the following is (are) feature(s) of preferred stock? I. It generally has a fixed dividend. II. It generally has a dividend that increases annually. III. It receives preference in bankruptcy over common stock. IV. It receives preference in bankruptcy over secured bond holders. a) II and IV only b) I and III only c) I only d) II and III only e) I and IV only 2. A System pays a constant annual dividend. Over the past...
1. Mark owns a stock with a market price of $53 per share. This stock pays...
1. Mark owns a stock with a market price of $53 per share. This stock pays a constant annual dividend of $1.64 a share. If the price of the stock suddenly falls to $41 a share, you would expect the: I. dividend yield to increase. II. dividend yield to decrease. III. growth rate to increase. IV. growth rate to decrease. a) II only b) I and III only c) II and IV only d) III only e) I only 2....
1. $39.00 per share is the current price for Foster Farms' stock. The dividend is projected...
1. $39.00 per share is the current price for Foster Farms' stock. The dividend is projected to increase at a constant rate of 5.50% per year. The required rate of return on the stock, rs, is 9.00%. What is the stock's expected price 3 years from today? Select the correct answer. a. $46.19 b. $46.97 c. $46.58 d. $45.80 e. $45.41 2. Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $5.50 per share....
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock price at any point in time. III. requires the required return to be higher than the growth rate. IV. assumes that dividends increase by a constant amount forever. V. none of the above is correct Multiple Choice 0 II, and IV only 0 V only 0 1, I, II, and IV only 0 Ill only 0 In order to estimate...
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return...
For ABC Corp. paying a constant annual dividend, its stock price decreased. Which is expected for ABC Corp.: 1. Its dividend yield to decrease Its dividend yield to increase Its capital gains yield to decrease Its capital gains yield to increase III. IV. Select one: a. ll only O b. II and IV only O c. I and III only d. I only
In accordance with the dividend growth model, an increase in the following except will raise the current value of a stock. 1. dividend amount II. investor's required return III. dividend growth rate Multiple Choice 0 I and Il only 0 O and Ill only 0 I only 0 Ill and III 0 ll only Which of the following is/are true for the average accounting return method of project analysis? 1. does not need a cutoff rate II. ignores time value...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value B) the expected rate of rectum equals or exceeds the required turn C) the capital gains rate is less than the required rumande dividends are paid D) the market price is greater than the justified price Answer 2) Which of the following variables used in determining a stock's intrinsic als can be known with the greatest level of confidence A] future carmings B) expected...
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