1) Preferred stock can be valued using the:

1. free cash flow valuation model.
2. zero-growth value model.
3. constant-growth model.
4. variable growth model

2)

City Foods, is a firm that is experiencing rapid growth. The firm just paid a dividend of $2.00 yesterday. They expect to see their dividend grow at a twenty percent rate for the next two years and then level out at a continuous six percent growth rate. City Food's required rate of return is twelve percent. What is the most you would pay for City Foods' common stock now?

1. $24.70
2. $58.51
3. $40.62
4. $45
5. $46.80

3) When a company wishes to raise capital through the sale of common stock but does not want to give up control it issues:

1. treasury stock.
2. nonvoting stock.
3. rights.
4. supervoting stock

4) Most firms have several classes of common stock outstanding.

a) True

b)False

5)An example of a primary market transaction is buying 100 shares of Wal-Mart stock from your uncle.

a) True

b) False