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MGT 5002 Final Exam




INAL EXAM MGT 5002;MULTIPLE CHOICE CHAPTER 9;(9-5) Required return;1).;If in the opinion of a given investor a stock?s expected return exceeds its required return;this suggests that the investor thinks;a.;b.;c.;d.;e.;the stock is experiencing supernormal growth.;the stock should be sold.;the stock is a good buy.;management is probably not trying to maximize the price per share.;dividends are not likely to be declared.;(9-1) Preemptive right;2).;The preemptive right is important to shareholders because it;a.;b.;c.;d.;e.;allows managers to buy additional shares below the current market price.;will result in higher dividends per share.;is included in every corporate charter.;protects the current shareholders against a dilution of their ownership interests.;protects bondholders, and thus enables the firm to issue debt with a relatively low;interest rate.;(9-2) Classified stock;3).;Companies can issue different classes of common stock. Which of the following;statements concerning stock classes is CORRECT?;a.;b.;c.;d.;e.;All common stocks fall into one of three classes: A, B, and C.;All common stocks, regardless of class, must have the same voting rights.;All firms have several classes of common stock.;All common stock, regardless of class, must pay the same dividend.;Some class or classes of common stock are entitled to more votes per share than other;classes.;1;Final exam MGT 5002;(9-5) Constant growth model;4).;If a stock?s dividend is expected to grow at a constant rate of 5% a year, which of the;following statements is CORRECT? The stock is in equilibrium.;a.;b.;c.;d.;e.;The expected return on the stock is 5% a year.;The stock?s dividend yield is 5%.;The price of the stock is expected to decline in the future.;The stock?s required return must be equal to or less than 5%.;The stock?s price one year from now is expected to be 5% above the current price.;(9-7) Corporate valuation model;5).;Which of the following statements is CORRECT?;a. To implement the corporate valuation model, we discount projected free cash flows at;the weighted average cost of capital.;b. To implement the corporate valuation model, we discount net operating profit after;taxes (NOPAT) at the weighted average cost of capital.;c. To implement the corporate valuation model, we discount projected net income at the;weighted average cost of capital.


Paper#81065 | Written in 18-Jul-2015

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