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Chapter 08
Stock Valuation
Multiple Choice Questions
1.
What is the model called that determines the present value of a stock based
on its next annual dividend, the dividend growth rate, and the applicable
discount rate?
2.
Which one of the following is computed by dividing next year's annual
dividend by the current stock price?
3.
Which one of following is the rate at which a stock's price is expected to
appreciate?
4.
Which one of the following types of stock is defined by the fact that it
receives no preferential treatment in respect to either dividends or
bankruptcy proceedings?
5.
A company has two open seats, Seat A and Seat B, on its board of directors.
There are 6 candidates vying for these 2 positions. There will be a single
election to determine the winner of both open seats. As the owner of 100
shares of stock, you will receive one vote per share for each open seat. You
decide to cast all 200 of your votes for a single candidate. What is this type
of voting called?
6.
You want to be on the board of directors of Wisely Foods. Since you are the
only shareholder that will vote for you, you will need to own more than half
of the outstanding shares of stock if you are to be elected to the board.
What is the type of voting called that requires this level of stock ownership
to be successfully elected under these conditions?
7.
You cannot attend the shareholder's meeting for Alpha United so you
authorize another shareholder to vote on your behalf. What is the granting
of this authority called?
8.
What are the distributions to shareholders by a corporation called?
9.
Which one of the following is a type of equity security that has a fixed
dividend and a priority status over other equity securities?
10.
Callander Enterprises stock is listed on NASDAQ. The firm is planning to
issue some new equity shares for sale to the general public. This sale will
occur in which one of the following markets?
11.
The secondary market is best defined by which one of the following?
12.
An agent who maintains an inventory from which he or she buys and sells
securities is called a:
13.
An agent who arranges a transaction between a buyer and a seller of equity
securities is called a:
14.
The owner of one of the 1,366 trading licenses for the NYSE is called a:
15.
The person on the floor of the NYSE who executes buy and sell orders on
behalf of customers is called a(n):
16.
A market maker who acts as a dealer in one or more securities on the floor
of the NYSE is called a:
17.
A floor broker on the NYSE does which one of the following?
18.
An individual on the floor of the NYSE who owns a trading license and buys
and sells for his or her personal account is called a:
19.
Which one of the following is the electronic system used by the NYSE for
directly transmitting orders to specialists?
20.
The stream of customer orders coming in to the NYSE trading floor is called
the:
