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finance data bank

Question # 00004948
Subject: Business / Finance
Due on: 12/30/2013
Posted On: 12/08/2013 01:57 PM
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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

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Tutorial Preview …dilution xx their xxxxxxxxx Answer: TRUE xxx American Depositary xxxxxxxx (ADRs) xxx xxxxxx issued xx U S xxxxx representing ownership xx shares xx x foreign xxxxxxxxx stock held xx deposit by xxx U x xxxx in xxx foreign market xxx issued in xxxxxxx to x x investors xxxxxxx TRUE 106 xxxxxxxx stock generally xxxx not xxxx xxxxxx rights, xxxx not earn xxxxxxxxxx and does xxx have x xxxxx on xxxxxx in liquidation xxxxxxx TRUE 107 xxx ________ xxx xxxxxxxxx referred xx as the xxxxxxxx owners of xxx corporation xx xxxxxxxxx stockholders xx unsecured creditors xx common stockholders xx secured xxxxxxxxx xxx Treasury xxxxx results from xxx A) firm xxxxxxx stock xxx xxxxxxx than xxx par value xx cumulative feature xx preferred xxxxx xx repurchase xx outstanding stock xx authorization of xxxxxxxxxx shares xx xxxxx by xxx board of xxxxxxxxx 109 The xxxxxxx of xxxxxxxxx xxxxxx stock xx to A) xxxxx the voting xxxxx of xxx xxxxxxxxxx B) xxxxx the minority xxxxxxxx to elect xxx director xx xxxxx capital xxxxxxx giving up xxx voting rights xx give xxxxxxxxxx xx distribution xx earnings to xxxxx shareholders who xxx the xxxxx xxx A xxxxx statement gives xxx shareholder the xxxxx A) xx xxx vote xxx each…
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Preview: but xxxxxxxx what xx left after xxx other claims xx the xxxxxx xxxxxx and xxxxxx have been xxxxxxxxx Answer:  TRUE 103                         Preferred xxxxx that xxxxxxxx xxx dividend xxxxxxxx based on xxxxxxx formulas allowing xxxxxxxxx stockholders xx xxxxxxxxxxx with xxxxxx stockholders in xxx receipt of xxxxxxxxx beyond x xxxxxxxxx amount xx called cumulative xxxxxxxxx stock Answer:  FALSE 104 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx rights xxxxx xxxxxxxx shareholders xx maintain voting xxxxxxx and protect xxxxxxx the xxxxxxxx xx their xxxxxxxxx Answer:  TRUE 105                         American xxxxxxxxxx Receipts (ADRs) xxx claims xxxxxx xx U x banks representing xxxxxxxxx of shares xx a xxxxxxx xxxxxxxxx stock xxxx on deposit xx the U x bank xx xxx foreign xxxxxx and issued xx dollars to x S xxxxxxxxx xxxxxxxxxxxxxxxxxxxx                         Treasury xxxxx generally does xxx have voting xxxxxxx does xxx xxxx dividends, xxx does not xxxx a claim xx assets xx xxxxxxxxxxx Answer:  TRUE 107 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx ________ are xxxxxxxxx referred to xx the xxxxxxxx xxxxxx of xxx corporation A) preferred stockholdersB) unsecured creditorsC) common stockholdersD) secured creditors 108 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx stock results xxxx theA) xxxx xxxxxxx stock xxx greater than xxx par value xxxxxxxxxxxxxxxxxxxxxxx on xxxxxxxxx xxxxx C) repurchase of xxxxxxxxxxx stock D) authorization of xxxxxxxxxx shares of xxxxx by xxx xxxxx
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