1) An investor should purchase a stock when A) the market price exceeds the intrinsic value B) the expected rate of rectum equals or exceeds the required turn C) the capital gains rate is less than the required rumande dividends are paid D) the market price is greater than the justified price Answer 2) Which of the following variables used in determining a stock's intrinsic als can be known with the greatest level of confidence A] future carmings B) expected return on the market C) the risk free rate of retum D) future dividends Answer: 3) The most uncertain value used in the Capital Asset Pricing Model is Albea B) the risk-fresate C) expected return on the market D) all we equally uncertain Answer: 4) Michelak's Maritime Industrias relatively stable caring and as an audividend of $3.00 per share. This dividend has remained constant over the past few years and is expected to emain constant for some time to come. If you want to cam 11on meat in the common stock of Michalak's, how much should you pay to purchase cach share of stock A) SI250 B) $18.88 C) $20.83 D) 522 Answer 5) What is the required of return on a mo ck that is t ed to pay $0.75 dividend next year if dividends are expected to grow a 2 percent annually and the current stock price is $8 597 A)X.73% B) 9196 C) 10.7395 D 1138% Answer 6) Which of the following statements concerning the const-growth dividend valuation model is are correct? 1. One simple method of estimating the dividend growth rate is to analyze the historical patie of dividends IL The expected to return equals the return from capital gains plus the return from dividends d er if III. The model is applicable to growth firms with initially high growth rates IV. The intrinsic value akulated using this method can change from ce investe their risk return puyodis differ Aland IV only B) II and I'll only C) I, II and IV only Dlland Illy List the key variables that affect the Period explain the relationship between each variable and the P rato (a) growth rate in carings the higher the growth rate the higher the PE ratio (b) generals of the economy, the better the economic outlook, the higher the PE (e) amount of debt in a companys capital structure the lower the debeat, the higher the (d) current and projected rate of inflation the lower the inflation the higher the PE 6) Which of the following statements concerning the c r owth dividend valuation model is (are) correct? 1One simple method of estimating the dividend growth rate is to analyze the historical pattern of dividends IL The expected total return equals the return from capital gains plus the return from dividends paid III. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk return payoffs differ, A) I and IV only B) Iland Ill only C) I, II and IV only D) I, II and III only Answer: 7) List the key variables that affect the Perio and explain the relationship between cach variable and the P/E ratio (a) growth rate in carings the higher the growth rate, the Migher the PE ratio (b) general state of the economy, the better the economic outlook, the higher the PIE (c) amount of debt in a company's capital structure, the lower the debt ratio, the higher the PE (d) current and projected rate of inflation the lower th a t the higher the PE (c) level of dividends: the lower the dividend payout the higher the PE Answer: 8) Which of the following factors are considered when analyzing an industry I the nature and conditions of governmental regulations IL the involvement and relations, if any, with laborios III. the development of new technologies relevant to the industry IV. the extent of competition within the industry A) I, II and IV only B) II, III and IV only CI. II and Ill only D) LII, III and IV Answer: 9) Which one of the following statements concerning accounting reports is correct? A) The income statement reflects the position of a firm as of a single point in time B) The total cquity of a firm is equal to the total assets plus the local abilities C) The statement of cash flows identifies both the sources and the use of cash D) The income statement reflects the amount of cash available for investment and financing activities Answer: 10) On March 31, Adolpha, Inc. reported the following information on its financial statements. Tours Total long-term Total current is Total long-term debt $212586 65.215 2005,256 What is the available networking capital for Adolpha Inc.? A)-5253,844 B)-S12166