11. a proxy is a document giving one party authority to act for another party, i
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Question
11. a proxy is a document giving one party authority to act for another party, including the palates of the shares of common stock. The proxy can be important tool relating to control of the firm.12. good company stock as a required rate return of 11 1/2% and sells for $25 per share. The dividend is expected to grow at a constant rate of 7% per year. What is good last dividend?
• $.95
• $1.05
• $1.16
13. if two firms have the same current dividend in the same expected dividend growth rate, the stocks must sell at the same current price or else the market will not be in equilibrium.
14. a stock is expected to pay a dividend of $.75 at the end of the year. The required rate of return is 12.5% and the expected constant growth rate is 8.5%. What is the current stock price?
• $17.82
• $18.28
• $18.75
15. most studies of stock market efficiency suggest that the stock market is highly efficient in the weak form and reasonably efficient in the semi-strong form. Based on these findings, which of the following statements is correct?
• Information you read in the Wall Street Journal today cannot be used to select stocks that will consistently beat the market
• Stock prices will respond whenever financial information Israelis to public. It does not matter whether this is financial information had been expected or not
• managers who have inside information that is not available to the public cannot consistently earn abnormal returns
• information disclosed in the Company's most recent annual reports can be used to consistently beat the market
16. if security markets were truly strong form efficient, one could never earn the realized return on the stock greater than the marginal investors expected and required rate of return on the stock.
17. the passing growth discount cash flow model used to evaluate the prices of common stock is essentially the same as the model used to find the price of perpetual preferred stock or any perpetuity.
18. the total return on a share of stock refers to the dividend yield less any commissions paid when the stock is purchased and sold.
19. which of the following statements is correct
• Semi strong form for market efficiency implies that as soon as any public or private information comes into being it is incorporated into the stock's prices.
• Weak form market efficiency implies that recent trends in the stock prices are of no use in predicting future stock prices.
• Market efficiency implies that all stock should have the same expected return
• according to strong for market efficiency, insiders would find impossible to consistently earn abnormal returns in the stock market even if they have superior knowledge about the company
20. classified stock differentiates different classes of common stock and using it is one way companies can meet special needs such as when owners of a startup firm need additional equity capital but do not want to relinquish voting control.
Explanation / Answer
1) A person who acts on behalf of a member of a company for the purpose of voting at a company meeting. The proxy can also take the form of a written authorisation used, for example, to cast a vote at a shareholder's meeting.Therefore, it can be an important tool relating to the control of the firm. The statement is true. 2) Calculating the last year dividend (D0): From Dividend growth model, Ke = (D1 / P0) + g D1 = P0 (Ke-g) = $25 (0.115 - 0.07) = $25 (0.045) = $1.125 Therefore, the last dividend of Good is D0 = D1 (1-0.07) = $1.125 (0.93) = $1.05 Therefore, the correct option is $1.05 13) FAlse 14) From Dividend growth model, Ke = (D1 / P0) + g From Dividend growth model, Ke = (D1 / P0) + g P0 = D1 / (Ke - g) = $0.75 / (0.125 - 0.085) = $0.75 / 0.04 = $18.75 Therefore, the current price of the stock is $18.75 15) Information you read in the Wall street journal today cannot be used to select stocks that will consistently beat the market. Multiple questions cannot be posted. Five of the questions were answered. PLease post not more than 5 multiple choice questions. Thank you.Related Questions
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