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Question;Stock Valuation;1. General;Electric (GE) has about 10.3 billion shares outstanding and the stock price is;$37.10. The P/E ratio is about 18.3. Calculate the market capitalization for;GE. (Approximately);a. $679;billion;b. $188;billion;C. $382 billion;d. None of;the above;2. The Wall;Street Journal quotation for a company has the following values: Div: $1.12;PE: 18.3, Close: $37.22. Calculate the dividend payout ratio for the company;(Approximately).;a. 18%;B. 55%;c. 45%;d. None of;the above;3. If the;Wall Street Journal Quotation for a company has the following values close;55.14, Net chg: = +1.04, then the closing price for the stock for the previous;trading day was?;a. $56.18;B. $54.10;c. $55.66;d. None of;the above;4. Super;Computer Company's stock is selling for $100 per share today. It is expected;that this stock will pay a dividend of 6 dollars per share, and then be sold;for $114 per share at the end of one year. Calculate the expected rate of;return for the shareholders.;A. 20%;b. 15%;c. 10%;d. 25%;5. The value;of a common stock today depends on;a. Number of;shares outstanding and the number of shareholders;B. The expected future dividends and the discount rate;c. The Wall;Street analysts;d. Present value;of the future earnings per share;6. CK;Company stockholders expect to receive a year-end dividend of $5 per share and;then be sold for $115 dollars per share. If the required rate of return for the;stock is 20%, what is the current value of the stock?;A. $100;b. $122;c. $132;d. $110;23;Junjie Liu ? Econ 282 Practice;Multiple Choice;8. Deluxe;Company expects to pay a dividend of $2 per share at the end of year-1, $3 per;share at the end of year -2 and then be sold for $32 per share. If the required;rate on the stock is 15%, what is the current value of the stock?;A. $28.20;b. $32.17;c. $32.00;d. None of;the given answers;9. Casino;Inc. is expected to pay a dividend of $3 per share at the end of year-1 (D1);and these dividends are expected to grow at a constant rate of 6% per year;forever. If the required rate of return on the stock is 18%, what is current;value of the stock today?;A. $25;b. $50;c. $100;d. $54;10. The;constant dividend growth formula P0= Div1/ (r-g) assumes: I) the dividends are;growing at a constant rate g forever II) r > g III) g is never negative.;a. I only;b. II only;C. I and II only;d. III only;10. Will Co.;is expected to pay a dividend of $2 per share at the end of year -1(D1) and the;dividends are expected to grow at a constant rate of 4% forever. If the current;price of the stock is $20 per share calculate the expected return or the cost;of equity capital for the firm;a. 10%;b. 4%;C. 14%;d. None of;the above;11. World-Tour;Co. has just now paid a dividend of $2.83 per share (D0), the dividends are;expected to grow at a constant rate of 6% per year forever. If the required;rate of return on the stock is 16%, what is the current value on stock, after;paying the dividend?;a. $30;b. $56;C. $70;d. $48;12. The;expected rate of return or the cost of equity capital is estimated as follows;a. Dividend;yield - expected rate of growth in dividends;B. Dividend yield + expected rate of growth in dividends;c. Dividend;yield / expected rate of growth in dividends;d. (Dividend;yield) * (expected rate of growth in dividends);24;Junjie Liu ? Econ 282 Practice;Multiple Choice;13. Dividend growth rate for a stable firm can be estimated;as;a. Plow back;rate / the return on equity (ROE) B. Plow back rate * the return on equity;(ROE);c. Plow;back rate + the return on equity (ROE);d. Plow back;rate - the return on equity (ROE);14. MJ Co.;pays out 60% of its earnings as dividends. Its return on equity is 15%. What is;the stable dividend growth rate for the firm?;a. 9%;b. 5%;C. 6%;d. 15%;15. Michigan;Co. is currently paying a dividend of $2.00 per share. The dividends are expected;to grow at 20% per year for the next four years and then grow 6% per year;thereafter. Calculate the expected dividend in year 5.;a. $4.15;b. $2.95;C. $4.40;d. $3.81;16. Great;Motor Company is currently paying a dividend of $1.40 per year. The dividends;are expected to grow at a rate of 18% for the next three years and then a;constant rate of 5 % thereafter. What is the expected dividend per share in;year 5?;a. $2.35;B. $2.54;c. $2.91;d. $1.50;17. The;In-Tech Co. has just paid a dividend of $1 per share. The dividends are;expected to grow at 25% per year for the next three years and at the rate of 5%;per year thereafter. If the required rate of return on the stock is 18%(APR);what is the current value of the stock?;A. $12.97;b. $11.93;c. $15.20;d. None of;the above;18. R&D;Technology Corporation has just paid a dividend of $0.50 per share. The;dividends are expected to grow at 24% per year for the next two years and at 8%;per year thereafter. If the required rate of return in the stock is 16% (APR);calculate the current value of the stock.;a. $1.11;b. $7.71;C. $8.82;d. None of the above;25;Junjie Liu ? Econ 282 Practice;Multiple Choice;19. Ocean Co.;has paid a dividend $2 per share out of earnings of $4 per share. If the book;value per share is $25, what is the expected growth rate in dividends (g)?;a. 16%;b. 12%;C. 8%;d. 4%;20. Seven-Seas;Co. has paid a dividend $3 per share out of earnings of $5 per share. If the;book value per share is $40 and the market price is 52.50 per share, calculate;the required rate of return on the stock.;a. 12%;B. 11%;c. 5%;d. 6%;21. River Co.;has paid a dividend $2 per share out of earnings of $4 per share. If the book;value per share is $25 and is currently selling for $40 per share, calculate;the required rate of return on the stock.;a. 15.2%;b. 7.2%;c. 14.7%;D. 13.4%;22. Lake Co.;has paid a dividend $3 per share out of earnings of $5 per share. If the book;value per share is $40, what is the expected growth rate in dividends?;a. 7.5%;b. 8%;c. 12.5%;D. 5%;23. The growth rate in dividends is a function of two;ratios. They are;a. ROA and;ROE;b. Dividend;yield and growth rate in dividends C. ROE and the Retention Ratio;d. Book;value per share and EPS;24. Company X;has a P/E ratio of 10 and a stock price of $50 per share. Calculate earnings;per share of the company.;a. $6 per;share;b. $10 per;share;c. $0.20;per share;D. $5 per share;26;Junjie Liu ? Econ 282 Practice;Multiple Choice;25. Which of the following formulas regarding earnings to;price ratio is true;a. EPS/Po =;r[1 + (PVGO/Po] B. EPS/Po = r[1 - (PVGO/Po)];c. EPS/Po =;[r + (PVGO/Po)];d. EPS/Po;=[r + (1+(PVGO/Po)]/r;26. Generally;high growth stocks pay: A. Low or no dividends;b. High;dividends;c. Erratic;dividends;d. Both A;and C;27. A high proportion;of the value a growth stock comes from;a. Past;dividend payments;b. Past;earnings;C. PVGO (Present Value of the Growth Opportunities);d. Both A;and B;28. Summer Co.;is expected to pay a dividend or $4.00 per share out of earnings of $7.50 per;share. If the required rate of return on the stock is 15% and dividends are;growing at a current rate of 10% per year, calculate the present value of the;growth opportunity for the stock (PVGO).;a. $80;B. $30;c. $50;d. $26;29. Parcel;Corporation is expected to pay a dividend of $5 per share next year, and the;dividends pay out ratio is 50%. If the dividends are expected to grow at a;constant rate of 8% forever and the required rate of return on the stock is;13%, calculate the present value of the growth opportunity.;a. $100;b. $76.92;C. $23.08;d. None of;the above;30. Universal;Air is a no growth firm and has two million shares outstanding. It is expected;to earn a constant 20 million per year on its assets. If all earnings are paid;out as dividends and the cost of capital is 10%, calculate the current price;per share for the stock.;a. $200;b. $150;C. $100 d. $50

 

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