You are watching: Which of the following statements concerning the required rate of return on stocks is true?
Cumulative wanted stockA) has actually a ideal to poll cumulatively.B) needs dividends in arrears come be carried over into the following period.C) has actually a claim to dividends before bonds.D) has a greater required return than typical stock.
Bensen Co. Paid a dividend of $5.25 on its common stock yesterday. The company"s dividends room expected to grow at a constant rate that 8.5% indefinitely. If the required rate the return top top this stock is 15.5%, compute the existing value per share of Bensen Co. Stock.A) $76.43 B) $43.90 C) $81.38 D) $56.23
Waterfront Solutions, Inc. Paid a dividend that $5.00 per share top top its common stock yesterday. Dividends space expected to flourish at a constant rate that 4% because that the next two years, in ~ which allude the stock is expected to market for $56.00. If investors need a price of return on Waterfront"s typical stock that 18%, what have to the stock offer for today?A) $40.22 B) $50.22 C) $44.76 D) $48.51
Asymmetric Frames Corp had a return on same of 15%. The corporation"s revenue per share to be $6.00, that is dividend payout ratio was 40% and also its profit-retention rate was 60%. If these relationships continue, what will be unified Financial Corp"s internal growth rate?A) 9.0% B) 8.6% C) 15.6% D) 6.0%
Which that the following statements concerning the required rate of return on share is true?A) the higher an investor"s required rate the return, the higher the worth of the stockB) the greater the risk, the greater the forced return, other things gift equalC) The compelled return on preferred stock is generally greater than the forced return on typical stock.D) If danger is reduced, the forced return will decrease because much more investors room risk-averse.
Most desired stocks have a function that calls for all previous unpaid desired dividend payment be payment before any type of common stock dividends deserve to be paid. What is the name of this feature?A) provisional B) convertible C) participating D) cumulative
Beaver Corp wanted stock has a market price the $14.50. If it has a yearly dividend the $3.50, what is her expected rate of return if you acquisition the share at its industry price?A) 22.36% B) 19.45% C) 41.43% D) 24.14%
Beaver Corporation stock is right now selling for $58.00. It is expected to salary a dividend that $5.00 in ~ the finish of the year. Dividends are expected to thrive at a constant rate the 7.5% indefinitely. Compute the compelled rate that return ~ above Beaver coporation, group stock.A) 16.12% B) 15.65% C) 13.64% D) 12.48%
You observe Thundering Herd usual Stock offering for $40.00 every share. The next dividend is supposed to be $4.00, and also is meant to prosper at a 5% yearly rate forever. If your forced rate of return is 12%, need to you purchase the stock?A) no, due to the fact that the present value of the meant future cash flows is higher than $40B) no, due to the fact that the current value of the meant future cash operation is less than $40C) yes, due to the fact that the current value that the supposed future cash operation is greater than $40D) yes, since the present value that the meant future cash flows is much less than $40
What is the value of a wanted stock the pays a $5.55 dividend to an investor with a required rate that return the 10%?A) $55.50 B) $22.22 C) $27.83 D) $45
Maynard Inc. Wanted stock pays an annual dividend that $7 per share. Which of the complying with statements is true for an investor with a compelled return the 9%?A) The worth of the preferred stock is $77.78 per share.B) The value of the desired stock is $7 since the dividend is addressed at $7 every year .C) The worth of the preferred stock is $63.00 every share.D) The worth of the preferred stock is $6.30 every share because of the 9% forced return.
Using the consistent growth dividend valuation model and assuming dividends will expansion a consistent rate forever, the boost in the value of the stock yearly should be same to the A) dividend yield.B) dividend yield plus the funding gains yield.C) compelled return on the stock, rcs.D) expansion rate in dividends, g.
Preferred share is comparable to a bond in the complying with wayA) both save a development factor comparable to common stock.B) both carry out interest payments.C) preferred stock always contains a maturity date.D) both investments carry out a declared income stream.
Shackleford copy, group net earnings this year is $800,000. The company generally retains 35% of net earnings for reinvestment. The company"s usual equity currently has a book value the $5,000,000. They simply paid a dividend of $1.37, and also the required rate that return top top this stock is 12%. Compute the worth of this stock if dividends are expected to proceed growing unlimited at the company"s internal development rate.A) $11.42 B) $15.63 C) $4.35 D) $22.61
ACME, Inc. Expects that current yearly $2.50 per share common stock dividend to continue to be the same for the foreseeable future. Therefore, the worth of the stock to an investor with a compelled return that 12% isA) $30.00. B) $18.33. C) $20.83. D) $3.00.
Bevel building Products, Inc., whose usual stock is at this time selling because that $12 every share, is intended to salary a $1.80 dividend, and sell because that $14.40 one year native now. What room the dividend yield, growth rate, and also total price of return, respectively?A) 15% 12% 27% B) 10% 5% 15%C) 20% 15% 35% D) 15% 20% 35%
How is wanted stock comparable to bonds?A) Investors deserve to sue the certain if desired dividend payments are not paid (much favor bondholders can sue because that non-payment of interest payments).B) desired stockholders obtain a dividend payment (much favor interest payment to bondholders) that is normally fixed.C) desired stock is not choose bonds in any kind of way.D) Dividend payment to wanted shareholders (much like bond attention payments to bondholders) room tax deductible.
B) desired stockholders obtain a dividend payment (much prefer interest payments to bondholders) that is generally fixed.
If you suppose NoDiv corporation to offer for $75 every share in three years while payment no dividends along the way, and if your compelled rate that return is 16% per year, exactly how much is the share worth today?A) $42.68 B) $48.05 C) $74.64 D) $51.10
You are considering the acquisition of a usual stock the paid a dividend that $2.00 yesterday. You intend this share to have a expansion rate that 15 percent because that the following 3 years, bring about dividends the D1=$2.30, D2=$2.645, and D3=$3.04. The long-run normal growth rate ~ year 3 is supposed to be 10 percent (that is, a consistent growth price after year 3 the 10% per year forever). If you call for a 14 percent rate of return, how much need to you be willing to pay because that this stock?A) $89.75 B) $56.46 C) $83.65 D) $62.57
A small company struggling to reach profitability just announced a major new government contract that will certainly validate its an innovation and generate revenue for the following several years. The announcement of the contract willA) reason the stock price to increase because rcs (the compelled return) is likely to decrease and g (the development rate in future dividends) is most likely to increase.B) reason the share price to decrease because the federal government usually pays listed below market price for the goods and services that purchases.C) cause the share price to increase because rcs (the compelled return) is likely to increase.D) have actually no impact on the stock price since the company has not yet paid any dividends.
A) reason the share price to increase since rcs (the forced return) is most likely to decrease and also g (the development rate in future dividends) is most likely to increase.
LTM, Inc. Has actually an problem of desired stock who par worth is $1,000. The wanted stock payment a 4.5% dividend. If investors need a 5.5% price of return for these shares, what price must the desired stock offer for?A) $818.18 B) $611.11 C) $409.09 D) $508.33
What supplication entitles the usual shareholder to keep a proportionate share of ownership in a firm?A) the cumulative feature B) the convertible featureC) the preemptive appropriate D) the proportionality clause
Studio 55, Inc. Has actually an worry of preferred stock that pays a dividend of $4.00. The wanted stockholders require a rate of return top top this stock of 9%. At what price need to the wanted stock offer for? Round off to the nearest $0.10.A) $88.80 B) $62.50 C) $44.40 D) $36.00
Southland Tours has net revenue of $2 million this year. The book value that Southland Tours common equity is $8 million dollars. The company"s dividend payout ratio is 60% and also is intended to remain this way. What is Southland Tours" internal growth rate?A) 10% B) 6% C) 9% D) 15%
Castle, Inc. Payment a dividend yesterday the $2 every share. Castle A) 10% administration expects the dividend to rise next year to $3 annually. If the dividend is meant to stay at $3 every year for the foreseeable future, what is the value of the share to one investor through a forced rate the return that 10%?A) $7.50 B) $30.00 C) $50.00 D) $32.00
Which the the adhering to statements concerning the continuous growth dividend valuation design is true?A) The expansion rate must rise every year.B) The compelled rate that return must exceed the expansion rate.C) The dividend expansion rate should be bigger 보다 8%.D) The forced rate of return should be same to the growth rate for dividends.
South Stage, Inc. Desired stock payment an annual dividend the $2.75 per share. If the share is currently selling because that $27.50 per share, what is the expected price of return on this stock?A) 17.5% B) 2.75% C) 10.0% D) 27.5%
A firm have the right to increase the expansion rate of common stockholders" invest in the for sure by retaining much more earnings or raising return ~ above equity.
The amount of the preferred stock dividend is typically fixed either together a dollar lot or as a percent of the par value.
Because usual stock represents a residual attention in the corporation, the value of typical stock is same to the full firm value much less the firm"s impressive debt.
Two ideologies that allow for the retirement of wanted stock are contact provisions and also sinking fund provisions.
In theory, shareholders select the plank of directors, but in reality, management efficiently selects the directors.
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An investor"s required rate of return because that a common stock have the right to be estimated by summing the stock"s dividend yield and also annual growth rate, presume the expansion rate is continuous over time.