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44) The stream of customer orders coming in to the NYSE trading floor is called the:
A) paper trail.
B) trading volume.
C) order flow.
D) bid-ask spread.
E) commission trail.
45) The average time for a trade on the NYSE Arca is best defined as less than:
A) five minutes.
B) ten minutes.
C) one minute.
D) one second.
E) fifteen minutes.
46) A securities market primarily composed of dealers who buy and sell for their own
inventories is referred to which type of market?
A) Auction
B) Private
C) Over-the-counter
D) Regional
E) Insider
47) NASDAQ has:
A) an electronic network that transmits orders directly to the trading floor.
B) both floor and commission brokers.
C) three separate markets.
D) a single designated market maker for each listed stock.
E) level 3 data available online for easy access by all investors.
48) NYSE designated market makers:
A) execute trades on behalf of their clients.
B) are guaranteed a profit on every stock purchased and resold.
C) act as dealers.
D) provide a one-sided market.
E) are also referred to as "$2 brokers."
49) Which one of the following statements related to the NYSE is correct?
A) Exchange members must purchase trading licenses.
B) NYSE shareholders currently own "seats" on the exchange.
C) Designated market makers buy at the asked price.
D) The NYSE is privately owned by an investment firm.
E) Electronic trading has increased the demand for floor brokers.
50) Which one of the following transactions occurs in the primary market?
A) Purchase of 500 shares of GE stock from a current shareholder
B) Gift of 100 outstanding shares to a charitable organization
C) Gift of 200 shares of stock by a mother to her daughter
D) A purchase of newly issued stock from the issuer
E) IBM's purchase of GE stock from a dealer
51) Which one of the following statements applies to NASDAQ?
A) Composed of four separate markets
B) Exchange floor located in Chicago
C) Provides two levels of information access
D) Designated market maker system
E) Multiple market maker system
52) Which one of the following best describes NASDAQ?
A) Largest U.S. stock market in terms of dollar trading volume
B) Market where dealers buy at the asked price
C) Market where the designated market makers are located at posts
D) Computer network of securities dealers
E) Market with three physical trading floors
53) Who can access Level 3 of NASDAQ's information?
A) Anyone with internet access
B) Only NASDAQ regulators
C) Customers who pay an access fee
D) NASDAQ market makers
E) There is no Level 3
54) Three Corners Markets paid an annual dividend of $1.42 a share last month. Today, the
company announced that future dividends will be increasing by 1.3 percent annually. If you
require a return of 14.6 percent, how much are you willing to pay to purchase one share of this
stock today?
A) $11.23
B) $10.82
C) $10.68
D) $9.68
E) $11.57
55) Dee's made two announcements concerning its common stock today. First, the company
announced that the next annual dividend will be $1.58 a share. Secondly, all dividends after that
will decrease by 1.15 percent annually. What is the value of this stock at a discount rate of 15.5
percent?
A) $9.49
B) $10.10
C) $9.82
D) $10.51
E) $11.01
56) How much are you willing to pay for one share of LBM stock if the company just paid an
annual dividend of $2.24, the dividends increase by 2.3 percent annually, and you require a
return of 14.8 percent?
A) $19.29
B) $19.33
C) $18.33
D) $18.21
E) $17.59
57) Future Motors is expected to pay an annual dividend next year of $3.10 a share. Dividends
are expected to increase by 1.85 percent annually. What is one share of this stock worth at a
required rate of return of 15 percent?
A) $24.01
B) $26.30
C) $24.56
D) $23.57
E) $24.59
58) Yummy Bakery just paid an annual dividend of $3.40 a share and is expected to increase that
amount by 2.2 percent per year. If you are planning to buy 1,000 shares of this stock next year,
how much should you expect to pay per share if the market rate of return for this type of security
is 14.8 percent at the time of your purchase?
A) $29.89
B) $27.58
C) $29.83
D) $28.18
E) $27.20
59) The common stock of Water Town Mills pays a constant annual dividend of $2.25 a share.
What is one share of this stock worth at a discount rate of 16.2 percent?
A) $13.89
B) $14.01
C) $14.56
D) $13.79
E) $13.28
60) GEO Inc. has paid annual dividends of $.41, $.47, and $.53 a share over the past three years,
respectively. The company expects to now maintain a constant dividend. At a discount rate of
14.4 percent, what is the current value per share?
A) $2.85
B) $3.68
C) $2.43
D) $3.09
E) $3.18
61) The common stock of Dayton Repair sells for $47.92 a share. The stock is expected to pay
$2.28 per share next year when the annual dividend is distributed. The company increases its
dividends by 1.65 percent annually. What is the market rate of return on this stock?
A) 4.84 percent
B) 6.41 percent
C) 9.92 percent
D) 6.14 percent
E) 7.28 percent
62) The current dividend yield on CJ's common stock is 1.89 percent. The company just paid an
annual dividend of $1.56 and announced plans to pay $1.70 next year. The dividend growth rate
is expected to remain constant at the current level. What is the required rate of return on this
stock?
A) 10.86 percent
B) 15.82 percent
C) 9.08 percent
D) 13.39 percent
E) 12.75 percent
63) Southern Markets recently paid an annual dividend of $2.62 on its common stock. This
dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for
$28.12 a share. What is the market rate of return?
A) 13.88 percent
B) 14.07 percent
C) 14.21 percent
D) 14.37 percent
E) 13.47 percent
64) The Uptowner will pay an annual dividend of $3.26 a share next year with future dividends
increasing by 2.8 percent annually. What is the market rate of return if the stock is currently
selling for $49.10 a share?
A) 9.63 percent
B) 9.13 percent
C) 8.46 percent
D) 9.44 percent
E) 6.83 percent
65) Home Services common stock offers an expected total return of 14.56 percent. The last
annual dividend was $2.27 a share. Dividends increase at a constant 2.1 percent per year. What is
the dividend yield?
A) 16.66 percent
B) 16.48 percent
C) 13.35 percent
D) 14.20 percent
E) 12.46 percent
66) Gee-Gee common stock returned a nifty 21.6 percent rate of return last year. The dividend
amount was $.25 a share which equated to a dividend yield of 1.01 percent. What was the rate of
price appreciation for the year?
A) 20.59 percent
B) 21.38 percent
C) 23.60 percent
D) 22.87 percent
E) 21.52 percent
67) Roy's Welding common stock sells for $58.49 a share and pays an annual dividend that
increases by 1.3 percent annually. The market rate of return on this stock is 12.6 percent. What is
the amount of the last dividend paid?
A) $6.60
B) $5.86
C) $6.52
D) $6.98
E) $5.64
68) Flo's Flowers pays an annual dividend that increases by 1.8 percent per year, commands a
market rate of return of 13.8 percent, and sells for $19.08 a share. What is the expected amount
of the next dividend?
A) $2.24
B) $2.29
C) $2.37
D) $2.32
E) $2.17
69) The Garden Shoppe has adopted a policy of increasing its annual dividend at a constant rate
of 1.35 percent annually. The company just paid its annual dividend of $1.84. What will the
dividend be nine years from now?
A) $2.10
B) $2.05
C) $2.08
D) $2.02
E) $2.15
70) AB Co. stock pays a constant annual dividend, sells for $56.07 a share, and has a market rate
of return of 12.2 percent. What is the amount of the next annual dividend?
A) $5.67
B) $5.94
C) $6.21
D) $6.84
E) $7.30
71) You want to purchase some shares of JJ Farms stock but need a rate of return of 17.5 percent
to compensate for the perceived risk. What is the maximum you are willing to pay per share for
this stock if the company pays a constant $2.43 annual dividend per share?
A) $11.11
B) $13.89
C) $9.26
D) $7.20
E) $8.47
72) Home Products common stock sells for $36.84 a share and has a market rate of return of 15.8
percent. The company just paid an annual dividend of $1.61 per share. What is the dividend
growth rate?
A) 11.43 percent
B) 11.06 percent
C) 10.87 percent
D) 11.18 percent
E) 10.95 percent
73) Gee-Gee's is going to pay an annual dividend of $2.05 a share next year. This year, the
company paid a dividend of $2 a share. The company adheres to a constant rate of growth
dividend policy. What will one share of this common stock be worth six years from now if the
applicable discount rate is 11.2 percent?
A) $26.94
B) $28.00
C) $26.28
D) $27.33
E) $26.66
74) The UpTowner just paid an annual dividend of $4.12. The company has a policy of
increasing the dividend by 2.5 percent annually. You would like to purchase shares of stock in
this firm but realize that you will not have the funds to do so for another four years. If you
require a rate of return of 16.7 percent, how much will you be willing to pay per share when you
can afford to make this investment?
A) $32.03
B) $32.83
C) $33.12
D) $33.65
E) $32.47
75) Global Logistics just announced it is increasing its annual dividend to $1.68 next year and
will increase that dividend by 1.85 percent annually thereafter. How much will one share of this
stock be worth ten years from now if the required rate of return is 12.8 percent?
A) $18.43
B) $18.26
C) $18.09
D) $19.12
E) $18.77
76) Hot Teas common stock is currently selling for $38.97. The last annual dividend paid was
$1.26 per share and the market rate of return is 13.2 percent. At what rate is the dividend
growing?
A) 9.65 percent
B) 10.67 percent
C) 12.79 percent
D) 11.08 percent
E) 12.10 percent
77) Global Tek plans on increasing its annual dividend by 15 percent a year for the next four
years and then decreasing the growth rate to 2.5 percent per year. The company just paid its
annual dividend in the amount of $.20 per share. What is the current value of one share of this
stock if the required rate of return is 17.4 percent?
A) $1.82
B) $2.18
C) $2.03
D) $2.71
E) $3.05
78) Arcs and Triangles paid an annual dividend of $1.47 a share last month. The company is
planning on paying $1.52, $1.58, and $1.60 a share over the next three years, respectively. After
that, the dividend will be constant at $1.65 per share per year. What is the market price of this
stock if the market rate of return is 12 percent?
A) $13.98
B) $14.07
C) $13.54
D) $14.16
E) $15.01
79) KNJ Companies is preparing to pay annual dividends of $1.48, $1.60, and $1.75 a share over
the next three years, respectively. After that, the annual dividend will be $1.90 per share
indefinitely. What is this stock worth to you per share if you require a return of 14.6 percent?
A) $11.22
B) $12.21
C) $12.32
D) $11.47
E) $12.03
80) Over the next three years, Distant Groves will pay annual dividends of $.65, $.70, and $.75 a
share, respectively. After that, dividends are projected to increase by 2 percent per year. What is
one share of this stock worth today at a required return of 14.5 percent?
A) $5.49
B) $5.94
C) $5.68
D) $5.55
E) $5.86
81) Crystal Glass recently paid $3.60 as an annual dividend. Future dividends are projected at
$3.80, $4.10, and $4.25 over the next three years, respectively. Beginning four years from now,
the dividend is expected to increase by 3.25 percent annually. What is one share of this stock
worth today at a discount rate of 12.5 percent?
A) $42.92
B) $43.40
C) $45.12
D) $45.88
E) $46.50
82) The Sly Fox pays a constant dividend of $1.46 a share. The company announced today that it
will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final
liquidating dividend of $15.25 a share. What is one share of this stock worth today at a required
return of 18.5 percent?
A) $12.92
B) $11.44
C) $12.07
D) $13.09
E) $14.20
