Let's say that the dividend of a stock is expected to be $1.00 in a year. The current price is $100 a share. The required rate of return is 10%. The expected price of the stock is in a year according to the one-period valuation model. Select one: O a. $109 O b. $101 O $110 O d. $100 cross ou
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- Which of the following is NOT represented in a stock and flow diagram? O a. Levels b. Rates c. Constants d. Flows e. Sources f. None of the aboveThe term 'random walk' is used in investments to refer to O A. stock price changes that are random but predictable O B. stock prices that respond slowly to both old and new information O C. stock price changes are independent of one another and unpredictable O D. stock price changes that follow the pattern of past price changes O E. stock price changes that are not efficientLarge Company owns 35% of the common stock of Tiny Co. and uses the equity method to account for the investment. In 2025, Tiny reported an income of $260,000 and paid dividends of $90,000. There is no amortization associated with the investment. In 2025, how much income should Large Co. recognize related to this investment? O $90,000. O $91,000. O $122,500. O $31,500. O $59,500.
- 15. The daily newspaper lists this information on a stock:'Last $36.19, Net Chg -1.63 and Yld 1.3%. What is the amount of the current dividend? A. $0.44 B. $0.45 C S0.47 D. $0.49 E. $0.52Cash dividend O Stock dividend is made out of a firm's earnings. A stock dividend reduces corporate cash and retained earnings from profits reported in the income statement. O True O FalseSuppose instead Larry decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply. O C The price of his shares will rise if NanoSpeck issues additional shares of stock. NanoSpeck earns revenue when Larry purchases 100 shares, even if he purchases them from an existing shareholder. Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Larry's shares to decline.
- Investors who are looking for capital preservation tend to invest in stocks and stock mutual funds Select one: O True O False 11Which of the following statement(s) on return predictability are correct: 1. Present value relationship suggests that high dividend price ratio must be followed by high dividend growth or high expected returns or some combination of both 2. Return predictability is inconsistent with efficient markets 3. Existing studies suggest that there is some evidence for mean reversion in stock returns over longer horizons. 4. The Stambaugh bias will be larger for a more persistent predictor. O2,3,4 O 3,4 O 1,3,4 1,3A bond has a face value of $30,000 and matures after 8 years. Five offers were submitted for the purchase of the bond as follows: offer 1 = $25,800; offer 2 = $23,100; offer 3 = $26,450; offer 4 = $22,050; and offer 5 = $25,550. Which offer will yield the highest return on investment? O a. Offer 2 O b. Offer 3 O c. Offer 1 O d. Offer 4 O e. Offer 5
- 2. Chelsea Fashion has a current annual dividend of $0.80 a share next year. The market price of the stock is $22.40, and the growth rate is 5 percent. What is the firm's cost of equity?* O 8.57 percent O None of the above O 8.75 percent O 7.58 percent 8.24 percentWhy may different analysts arrive at different intrinsicvalues for the same stock?Stock ABC has a Forward for December at: $450, Is it reasonable that A PUT option on ABC, with a strike of $500, costs $45? A. No because the minimum intrinsic is $50. B. No, because $35 feels low for a stock with such a high price per share. C. Yes because Intrinsic is $40, Extrinsic is $5 D. Yes because it depends on the distribution; that is defined by the volatility and time to maturity