PS/420 PS420 PS 420 Unit 5 Quiz

 PS 420 Unit 5 Quiz

Unit 10 Assignment( Q+A)

Question 1

You just purchased preferred shares in Initech for $45.71. Initech pays annual dividends of $0.64. What is your required return on this investment?

Question 2

If Genco's preferred stock pays a dividend of $5 per share and its investors require an 8% return, what should its price per share of preferred stock be?

Question 3

Coors just paid out a dividend of $1.00 on its common stock, which is currently trading at $37.27. If dividends are paid annually and are expected to grow in value by 1% per annum forever, then what return will a shareholder earn if the stock is purchased today?

Question 4

Cherry Auto Sales just opened and does not expect to pay a dividend during its first year. At the end of its second year, Cherry's owners expect to pay a $2.00 dividend and plan to increase it 7% annually. If the required return is 20%, what should Cherry's stock price be?

Question 5

Mammoth Mart's common shares are currently trading for $59.85 and the company paid its annual dividend of $0.60 per share. If your required rate of return is 12%, what is the implied growth rate in dividends? (Assuming that dividends are expected to grow at a constant rate in perpetuity.)

Question 6

A share of common stock has a current price of $82.50 and is expected to grow at a constant rate of 10 percent. If you require a 14% rate of return, what is the current dividend of this stock?

Question 7

If the last dividend on Markowitz Trucking stock was $2 per share and if dividends are expected to grow 10% annually, what is the share price if the required return is 12%?

Question 8

Berg Inc. has just paid a dividend of $2. It's stock is now selling for $48 per share. The firm is half as risky as the market. The expected return on the market is 14%, and the yield on U.S. Treasury bonds is 11%. If the market is in equilibrium, what rate of growth is expected?

Question 9

The last dividend paid on Minsky Corp. stock was $3 per share. If Minsky investors require a 10% return, what should the share price be if the dividend payments are not expected to change?

Question 9

The last dividend paid on Minsky Corp. stock was $3 per share. If Minsky investors require a 10% return, what should the share price be if the dividend payments are not expected to change?