Saudi Electronic University

FIN 101

QUIZ 2

Question1)A communications company Days annual dividends of $10.56 with no possibility of it changing in the next several years. If the firm's stock is currently selling at $96, what is the required rate of return

A- 12.5%

B- 14%

C- 11 %

D- 13%

 

 

 

 

 

 

Question 2

A company with no growth potential expects no change in future dividends. Its last dividend was $6. What is the current price of the company's stock given a discount rate of 8 percent?

a- $57

b- $63 C- $77

D- $75

 

 

 

 

Question 3

The preferred stock of Acme International is selling currently at $136. If your required rate of return is 8 percent, what is the dividend paid by this stock

A - $15

B- $10.88

C- $12

 

 

 

Question 4

Alma Corporation has just paid a dividend of $4.45. The company has forecasted a growth rate of 8 percent for the next several years. If the appropriate discount rate is 14 percent, what is the current price of this stock?

A - $80.10

B- $ 88.10

C- $98.25

D- $88.15

 

 

 

 

Question 5

Lama Corp. is planning to find a project by issuing 8-year zero coupon bonds with a face value of

$1,000. Assuming semiannual coupons payments what will be the price of these bonds if the appropriate discount ate 14. Percent?

A- $258.42

B- $319,078

C- $322.5

 

 

 

 

Question 6

Marketability is the ability of an investor:

A - to sell the security above its par value

B- to sell a security quickly, at a low transaction cost, and at a pike close to its fait market value

C- to sell at the future value

D- to sell at a profit under all circumstances.

 

 

Question 7

If a bond's coupon rate is greater than the market rate, then the bond will sell A- at a price greater than its face value.

B- at a price less than its face value

C- at a price equal to its face value.

D- None of the above.

 

 

Question 8

Sony Corp issued five-year bonds that pay a coupon of 6.5% annually. The current market rate for similar bonds is 7 percent How much will you be willing to pay for Sony's bond today?

A- $979.499

B- $992.321

C- $960.320

D- $877.771

 

                      

 

 

 

Question 9

A company is growing at a constant rate of 8 percent. Last week it paid a dividend of $3.00. If the required rate of return is 15 percent what is the price of the stock three years from now?

A- $55.15

B- $56.21

C- $45.15

D- $58.31

 

 

 

 

 

Question 10

The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments

A- less than the price of the bond

B- equal to zero.

C- exceed the price of the bond.

D- equal to the price of the bond