Which of the following provisions is not with preferred stock?

Question 6 options:

a)

Cumulative dividends

b)

Conversion feature

c)

Call feature

d)

Residual claim to income

In our formula for valuing a stock with no growth in dividends (P₀= D₁/ K), D₁is the

Question 7 options:

a)

Price of the stock today

b)

Dividend paid today

c)

Dividend at the end of the first year

d)

Required rate of return

If a corporation's charter calls for preemptive rights for shareholders, this means

Question 8 options:

a)

Existing common shareholders get the first opportunity to purchase new shares

b)

If the company sells shares they ae sold directly on the secondary markets

c)

If the company issues new shares management is given first opportunity to purchase them

d)The company is not able to issue new shares

Which bond type would have the highest risk level?

Question 9 options:

a)

Secured debt

b)

Debenture

c)

Subordinated debenture

d)

All would have the same risk level

If we want to calculate a stock's value (P₀= D₁/ K_e) and we know it paid a dividend of $1.00 today and the dividend growth rate is 5%, what adjustment do we need to make before using this formula?

Question 10 options:

a)

No adjustment. We use $1.00 as our D₁

b)

We need to use D₀to calculate D₁

c)

We cannotcalculateD₁based on the information provided

d)

The dividend is not used in calculating price

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