Bergen, Inc. has common stock outstanding. The next expected dividend payout is $6.00 per share. Investors have a required rate of return of 12%. They expect the companys earnings and dividends to grow at a constant rate of 4%. What is the current selling price of the stock? ]: $100 $75 $54 $50.04

Griffin, Inc. common stock paid a dividend of $3.00 per share last year. Investors have a required rate of return of 9%. They expect the company's earnings and dividends to grow at a constant rate of 4%. What is the current selling price of the stock?

	$62.40
	$60.00
	$38.67
	$37.33

You are considering buying some common stock in Marta, Inc. The stock is selling for $90 per share. The next expected dividend is $4.50 per share. You expect a growth rate of 5%. What rate of return would you expect to earn if you bought this stock?

	5.05%
	5.3%
	5.5%
	10%

If a companys stock price rises, but the dividend remains constant, the dividend yield will:

	go up.
	go down.

As the expected growth rate (g) for a company's common stock increases,

	the rate of return will go up.
	the stock price will fall.
	both of the above will happen.

If the required rate of return in the stock market rises, what can be expected to happen to stock prices?

	Stock prices will rise.
	Stock prices will fall.

What two components make up the required rate of return on common stock?

	Dividend yield and growth.
	Dividend yield and current stock price.
	Earnings per share and current stock price.
	Earnings per share and growth.

Which of the following is true about stocks?

	Dividends are tax deductible to the issuing corporation.
	Common stock dividends are mandatory.
	Common stockholders receive the par value of their shares when the stock matures.
	The equation to find the price of a stock includes a non-ending stream of dividends growing at a constant rate.

Which is usually the cheapest form of financing for a company?

	Debt
	Preferred stoc
	Retained Earnings
	Common stock

A company pays 7% interest on its debt. The higher the companys tax rate,

	the higher the after-tax cost of debt.
	the lower the after-tax cost of debt.
	after-tax cost is unchanged

The cost of equity capital in the form of new common stock will be higher than the cost of retained earnings because of:

	the existence of taxes.
	the existence of float costs.
	the existence of financial leverage.
	investors' unwillingness to purchase additional shares of common stock.

The cost of preferred stock:

	goes up when you consider the tax effect.
	goes down when you consider the tax effect.
	is not effected by taxes.

In computing the cost of common stock to the issuing corporation, if the next expected dividend (D,) goes down and the current stock price (P_o) goes up, what will happen to the cost of capital from common stock (Ke)?

	Ke will go down.
	Ke will go up.
	Ke will stay the same.
	Ke cannot be determined with this information, since two variables are changing.

Retained earnings has a cost associated with it because:

	new funds must be raised.
	Ke > g
	flotation costs increase the cost of funding.
	there is an opportunity cost associated with using stockholder funds.

Initially, the weighted average cost of capital is comprised of:

options:

	Debt, Preferred Stock, and Common Stock
	Debt, Preferred Stock, and Retained Earnings
	Debt, Preferred Stock, Retained Earnings, and Common Stock
	Preferred Stock, Retained Earnings, and Common Stock