QUESTION 1

1. Analysts expect a stock to be selling for $22 in one year. It is also expected to pay a $1 dividend during the year. If you require a 15% return on this kind of investment, what is the most you can pay for the stock today?

   	a.	$21.00
   	b.	$18.70
   	c.	$20.00
   	d.	None of the above

1 points

QUESTION 2

1. Assume a dividend today of $2.50 with anticipated growth over the next three years of 10%. The estimated dividend at the third year is:

   	a.	$3.25.
   	b.	$3.28.
   	c.	$3.33.
   	d.	None of the above

1 points

QUESTION 3

1. Parker and Smith recently paid $1.80 per share on its stock. The dividends are expected to grow at 6% indefinitely. If investors require a 10% return on the stock, what is the current price? What is the expected dividend in three years?

   	a.	$45.00;$2.14
   	b.	$45.00; $1.98
   	c.	$44.70; $2.14
   	d.	$44.70; $$1.98

1 points

QUESTION 4

1. Camden Properties has recently paid a dividend of $1. Dividends are expected to grow at a constant rate of 5% thereafter. If the required rate of return is 9%, then what is the current value of the stock?

   	a.	$27.25
   	b.	$25.00
   	c.	$20.00
   	d.	$26.25

1 points

QUESTION 5

1. List the following types of bonds in order of interest rates from low to high, all other factors being equal: Subordinated debt; Senior debt; Senior debt that is also convertible

   	a.	Convertible, Senior, Subordinated
   	b.	Subordinated, Senior, Convertible
   	c.	Senior, Subordinated, Convertible
   	d.	Senior, Convertible, Subordinated
   	e.	Convertible, Subordinated, Senior

1 points

QUESTION 6

1. Bakersfield Inc. recently paid a dividend per share of $2.10. The Board of Directors would like to grow the dividend at 5% per year indefinitely. If shareholder expect a return of 8%, what is the current price of the stock?

   	a.	$70.00
   	b.	$42.00
   	c.	$44.10
   	d.	$73.50