Chapter07-EquityMarketsandStockValuationChapter07EquityMarketsandStockValuationMultipleChoiceQuestions1.Whatisthenamegiventothemodelthatcomputesthepresentvalueofastockbydividingnextyear'sannualdividendamountbythedifferencebetweenthediscountrateandtherateofchangeintheannualdividendamount?A.StockpricingmodelB.EquitypricingmodelC.CapitalgainmodelD.DividendgrowthmodelE.Presentvaluemodel2.Thedividendyieldisdefinedas:A.thecurrentannualcashdividenddividedbythecurrentmarketpricepershare.B.thecurrentannualcashdividenddividedbythecurrentbookvaluepershare.C.nextyear'sexpectedcashdividenddividedbythecurrentmarketpricepershare.D.nextyear'sexpectedcashdividenddividedbythecurrentbookvaluepershare.E.nextyear'sexpectedcashdividenddividedbynextyear'sexpectedmarketpricepershare.3.Thecapitalgainsyieldequalswhichoneofthefollowing?A.TotalyieldB.CurrentdiscountrateC.MarketrateofreturnD.DividendyieldE.Dividendgrowthrate4.Whichoneofthefollowingtypesofsecuritieshasnopriorityinabankruptcyproceeding?A.ConvertiblebondB.SeniordebtC.CommonstockD.PreferredstockE.Straightbond7-1Chapter07-EquityMarketsandStockValuation5.Maryowns100sharesofstock.Eachshareentitleshertoonevoteperopenseatontheboardofdirectors.Assumethereare3openseatsinthecurrentelectionandMarycastsall300ofhervotesforasinglecandidate.Whatisthetermusedtodescribethistypeofvoting?A.ProxyB.AggregateC.CumulativeD.StraightE.Condensed6.Therearetwoopenseatsontheboardofdirectors.Iftwoseparatevotesoccurtoelectthenewdirectors,thefirmisusingatypeofvotingthatisbestdescribedas_____voting.A.simultaneousB.straightC.proxyD.cumulativeE.sequential7.Katecouldnotattendthelastshareholdersmeetingandthusshegrantedtheauthoritytovoteonherbehalftothemanagersofthefirm.WhichoneofthefollowingtermsisusedtodescribethemethodbywhichKate'sshareswerevoted?A.StraightB.CumulativeC.Consent-formD.ProxyE.Inabsentia8.Dividendsarebestdefinedas:A.cashpaymentstoshareholders.B.cashpaymentstoeitherbondholdersorshareholders.C.cashorstockpaymentstoshareholders.D.cashorstockpaymentstoeitherbondholdersorshareholders.E.distributionsofstocktocurrentshareholders.7-2Chapter07-EquityMarketsandStockValuation9.Whichoneofthefollowinggenerallypaysafixeddividend,receivesfirstpriorityindividendpayment,andmaintainstherighttoadividendpayment,evenifthatpaymentisdeferred?A.CumulativecommonB.NoncumulativecommonC.NoncumulativepreferredD.CumulativepreferredE.Seniorcommon10.Newlyissuedsecuritiesaresoldtoinvestorsinwhichoneofthefollowingmarkets?A.ProxyB.StatedvalueC.InsideD.SecondaryE.Primary11.Whatisthemarketcalledthatallowsshareholderstoreselltheirsharestootherinvestors?A.PrimaryB.ProxyC.SecondaryD.InsideE.Initial12.Anagentwhobuysandsellssecuritiesfrominventoryiscalleda:A.floortrader.B.dealer.C.commissionbroker.D.broker.E.floorbroker.7-3Chapter07-EquityMarketsandStockValuation13.Abrokerisanagentwho:A.tradesonthefloorofanexchangeforhimselforherself.B.buysandsellsfrominventory.C.offersnewsecuritiesforsaletodealersonly.D.whoisreadytobuyorsellatanytime.E.bringsbuyersandsellerstogether.14.AnypersonwhoownsalicensetotradeontheNYSEiscalleda:A.dealer.B.floortrader.C.specialist.D.member.E.proxy.15.ApersonwhoexecutescustomerorderstobuyandsellsecuritiesontheflooroftheNYSEiscalleda:A.floortrader.B.specialist.C.runner.D.commissionbroker.E.marketmaker.16.Aspecialistisa(n):A.employeewhoexecutesorderstobuyandsellforclientsofh...
