Project #80797 - Finance

Question 1.1. E.I. du Pont de Nemours & Co. has an issue of $4.50 preferred stock outstanding. It is currently selling for $108. What rate of return are investors requiring? (Points : 1)

       4.17%
       4.5%
       9%
       24%.

 

Question 2.2. In an amortized loan: (Points : 1)

       the payments are the same every period, but the proportion that is interest increases.
       the payments are the same every period, and the proportion that is interest also is unchanged.
       the payments vary every period, but the proportion that is interest doesn’t change.
       the payments are the same every period, but the proportion that is interest decreases.

 

Question 3.3. We would expect that, all else being equal, investors would pay less for a stock that they view as having become more risky. Assume a stock has just paid a $2.00-per-share dividend. Analysts believe that future dividends will grow at a 14% rate. The constant dividend growth rate is 4%. What would the stock price be? (Points : 1)

       $14.29
       $20.00
       $20.80
       $28.57

 

Question 4.4. Which of the following is true of the structure of a zero-coupon bond? (Points : 1)

       an annuity of interest payments and a single principal payment at maturity
       no interim interest payments but a variable payment at maturity, depending on interest rates
       an annuity of payments comprised of both interest and principal
       no interim interest payments and a single payment at maturity

 

Question 5.5. Zeta Corporation just paid a $2.00 dividend. Analysts believe that Zeta Corporation’s dividend will grow by 20% next year, and then settle into a constant growth regime at 5% per year into the future. If investors assign a required rate of return of 12% to Zeta’s stock, what should the stock sell for today? (Points : 1)

       $30.00
       $32.14
       $34.29
       $36.00

 

Question 6.6. If we make the assumption that a company’s dividends grow at some constant rate, then we can value the stock as: (Points : 1)

       a growing perpetuity.
       a growing annuity.
       a perpetuity.
       an annuity.

 

Question 7.7. the effective annual percentage rate may be different that the stated APR (annual percentage rate) because: (Points : 1)

       compounding occurs more often than once a year.
       extra fees are added to most loans.
       banks are allowed to hide the real cost of borrowing.
       the APR assumes semiannual compounding.

 

Question 8.8. Compounding means that: (Points : 1)

       dollar interest the first year is multiplied by the number of years to get total interest.
       the same dollar amount of interest is paid each period.
       interest is paid on interest earned in earlier periods.
       the rate of interest grows over time.

 

Question 9.9. The name “annuity” suggests annual payments, but in fact we apply the term to: (Points : 1)

       any set of payments of the same dollar amount irrespective of timing.
       any set of monthly payments.
       any set of regularly spaced payments of the same dollar amount.
       any set of multiple payments.

 

 

Question 10.10. The longer we have to wait for a future amount to be received: (Points : 1)

       the lower its present value will be.
       the higher its present value will be.
       Time does not affect present value, so it doesn’t matter how long we have to wait.
       Beyond 10 years the value doesn’t change anymore because 10 years might as well be 20 years.

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Due By (Pacific Time) 09/02/2015 12:00 am
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