Question
1- Your company has no attractive investment opportunities. Its return on equity equals the discount rate, which is 11%. Its expected earnings this year are
1- Your company has no attractive investment opportunities. Its return on equity equals the discount rate, which is 11%. Its expected earnings this year are $4.30 per share. Find the P/E ratio of the firm.
a. 9.09
b. 11.11
C. 35.56
d. 42.68
2- Redeux Industries pays a dividend of $0.87 per quarter. The dividend yield on its stock is reported at 3.4 %. What price is the stock selling at?
a. $102.35 b. $117.06 c. $122.37 d. $137.06
3- In which form of market efficiency is all information contained in the stock price, both public and private?
a. Semi-strong
b. Strong
C. Strongest
d. Week
4- The price of a share of stock immediately increases upon the release of unexpected positive news about a company. This reaction is most closely described by which form of market efficiency?
a. Semi-stron
b. Strong
c. Strongest
d. Week
5- You buy a 5.0 percent coupon, 10-year maturity bond when its yield to maturity is 7 percent. A year later, the yield to maturity is 7.2 percent. What is your rate of return over the year?
a. 4.86%
b. 5.62%
C. 6.03%
d. 7.70%
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