BUS 401 QUES.2

 1.	Question :	Which of the following is NOT true of preferred stock?

 	


Question 2.	Question :	The cash flows for a perpetuity continue into the future indefinitely. An example of a perpetuity is:

 	

Question 3.	Question :	Interest rates are given as annual rates. If semiannual (twice a year) compounding is being used, then you would make the following adjustments:

 	



Question 4.	Question :	We would expect that, all else being equal, investors would pay less for a stock that they view as having become more risky. Assume a stock has just paid a $2.00-per-share dividend. Analysts believe that future dividends will grow at a 14% rate. The constant dividend growth rate is 4%. What would the stock price be?

 	



Question 5.	Question :	The great majority of stock trades occur:

 	

 	

Question 6.	Question :	GMX Resources, an independent oil and gas exploration and production company, has a 9.25% preferred stock outstanding, which pays an annual dividend of $2.3125. If investors require a return of 15% on small companies in this sector, what will this preferred stock sell for?

 	


Question 7.	Question :	the effective annual percentage rate may be different that the stated APR (annual percentage rate) because:

 	


Question 8.	Question :	The present value of $1,000 to be received in 1 year with annual compounding at a 10% per year rate, would be:

 	

Question 9.	Question :	The payment structure of a corporate bond is best thought of as:

 	
Question 10.	Question :	The Rule of 72 says: