Question 16

A company has a dividend growth rate of 6%, the expected retention rate is 65% and the equity required rate of return is 10.5%. The expected P/E ratio is closest to:

17.14

18.23

7.78

14.44

Question 17

Which of the following is most likely to enable a corporate governance board to act in the interest of long-term shareholders?

The board has representation from key customers.

The board are independent.

The CEO is the chairman of the board.

A majority of the board are part of the firm's management.

Question 18

If a bond's yield is higher than its coupon, the bond is trading at:

a discount.

par.

a premium.

indeterminate

Question 19

A company's board can be structured as one-tier or two-tier. Which of the following is incorrect with respect to these different arrangements?

In a two-tier structure, the supervisory board look after the company day-to-day.

A one-tier board is comprised of both executive and non-executive directors.

In a two-tier structure, the management board look after the company day-to-day.

Two-tier boards consist of a supervisory board and a management board.