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finance data bank

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Question;101. The;free cash flow valuation model can be used to determines the value of;an entire company as the present value of its expected free cash flows;discounted at the firm's weighted average cost of capital;102. A common stockholder has no guarantee of receiving;any cash inflows, but receives what is left after all other claims on the;firm's income and assets have been satisfied.;103. Preferred stock that provides for dividend payments;based on certain formulas allowing preferred stockholders to participate with;common stockholders in the receipt of dividends beyond a specified amount is;called cumulative preferred stock.;104. Preemptive rights allow existing shareholders to;maintain voting control and protect against the dilution of their ownership.;105. American Depositary Receipts (ADRs) are claims;issued by U.S. banks representing ownership of shares of a foreign company's;stock held on deposit by the U.S. bank in the foreign market and issued in;dollars to U.S. investors.;106. Treasury stock generally does not have voting;rights, does not earn dividends, and does not have a claim on assets in;liquidation.;107. The ________ are sometimes referred to as the;residual owners of the corporation.;A) preferred stockholders;B) unsecured creditors;C) common stockholders;D) secured creditors;108. Treasury stock results from the;A) firm selling stock for greater than its par;value.;B) cumulative feature on preferred stock.;C) repurchase of outstanding stock.;D) authorization of additional shares of;stock by the board of directors.;109. The;purpose of nonvoting common stock is to;A) limit the voting power of the;management.;B) allow the minority interest to elect;one director.;C) raise capital without giving up any;voting rights.;D) give preference on distribution of;earnings to those shareholders who own the stock.;110. A;proxy statement gives the shareholder the right;A) of one vote for each share owned.;B) to give up their vote to another;party.;C) to maintain their proportionate;ownership in the corporation when new common stock is issued.;D) to sell their share of stock at a;premium.;111. A;firm issued 5,000 shares of $1 par-value common stock, receiving proceeds of;$20 per share. The accounting entry for the paid-in capital in excess of par;account is;A) $5,000.;B) $ 95,000.;C) $100,000.;D) $0.;112. A;firm issued 10,000 shares of $2 par-value common stock, receiving proceeds of $40 per;share. The accounting entry for the paid-in capital in excess of par account is;A) $200,000.;B) $380,000.;C) $400,000.;D) $800,000.;113. A firm has the balance sheet accounts, common;stock, and paid-in;capital in excess of par, with values of $10,000 and $250,000, respectively.;The firm has 10,000 common shares outstanding. If the firm had a par value of;$1, the stock originally sold for;A) $24/share.;B) $25/share.;C) $26/share.;D) $30/share.;114. A firm has the balance sheet accounts, common;stock, and paid-in;capital in excess of par, with values of $40,000 and $500,000, respectively.;The firm has 40,000 common shares outstanding. If the firm had a par value of;$1, the stock originally sold for;A) $11.50/share.;B) $12.50/share.;C) $13.50/share.;D) $15.50/share.;Table 7.1;115. According to Table 7.1, Ford's common stock must;have closed at ________ per share on the previous trading day.;A) $29.64;B) $30.76;C) $30.99;D) $31.55;116. According to Table 7.1, the expected dividend per;share for Ford is;A) $0.25.;B)$1.00.;C) $2.00.;D) $3.30.;117. Referring to Table 7.1, if we assume that Ford's;dividends will grow at a rate of 10 percent forever, the required return on Ford's;stock would be;A) 7.4%.;B) 8.9%.;C) 11.0%.;D) 13.6%;118. Based on Table 7.1, Ford's earnings per share are;A) $0.80.;B) $1.21.;C) $1.68.;D) $1.91.;119. Based on the information given in Table 7.1, the;number of shares of Ford that were traded on the previous day was;A) 2,092.;B) 20,925.;C) 209,250.;D) 2,092,500.;120. In an efficient market, the expected return and the;required return are equal.;121. To a buyer, an asset's value represents the minimum;price that he or she would pay to acquire it.;122. If the expected return is less than the required;return, investors will sell the asset, because it is not expected to earn a;return commensurate with its risk.;123. If the expected return were above the required;return, investors would buy the asset, driving its price up and its expected;return down.;124. Efficient market hypothesis is the theory;describing the behavior of an assumed "perfect" market in which;securities are typically in equilibrium, security prices fully reflect all;public information available and react swiftly to new information, and, because;stocks are fairly priced, investors need not waste time looking for mispriced;securities.;125. In an efficient market, stock prices adjust quickly;to new public information.;126. In an inefficient market, stock prices adjust;quickly to new public information.;127. In an inefficient market, securities are typically;in equilibrium, which means that they are fairly priced and that their expected;returns equal their required returns.;128. A firm has an expected dividend next year of $1.20;per share, a zero growth rate of dividends, and a required return of 10;percent. The value of a share of the firm's common stock is ________.;A) $120;B) $10;C) $12;D) $100;129. A firm has an issue of preferred stock outstanding;that has a par value of $100 and a 4% dividend. If the current market price of;the preferred stock is $50, the yield on the preferred stock is ________.;A) 4.00%;B) 6.00%;C) 8.00%;D) none of the above;130. The ________ is utilized to value preferred stock.;A) constant growth model;B) variable growth model;C) zero-growth model;D) Gordon model

 

Paper#50973 | Written in 18-Jul-2015

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