BCOR 2204 Financial Management Test Quizzes
with Correct Answers
Which of the following is a difference between common stock and bonds?
a. Stocks have a stated maturity but bonds do not.
b. Bondholders have a voice in management, common stockholders don't.
c. Bondholders have a senior claim on assets and income relative to stockholders.
d. Dividend paid to stockholders is tax-deductible but interest paid to bondholders are not.
c. Bondholders have a senior claim on assets and income relative to stockholders.
Regarding the corporation's tax treatment of payments to financial security holders, it is
true that ______.
a. Interest and preferred stock dividends are tax-deductible, while common stock dividends
are not tax-deductible.
b. Interest and preferred stock dividends are not tax-deductible, while common stock
dividends are tax-deductible.
c. Common stock dividends and preferred stock dividends are not tax-deductible, while
interest is tax deductible.
d. Common stock dividends and preferred stock dividends are tax-deductible, while
interest is not tax-deductible.
c. Common stock dividends and preferred stock dividends are not tax-deductible, while interest
is tax deductible.
In the gordon model, the value of the common stock is the _____
a. Present value of a non-growing dividend stream.
, b. Present value of a constant growing dividend stream.
c. Actual amount each common stockholder would expect to receive if the firm's assets are
sold.
d. Net value of all assets which are liquidated for their exact accounting value.
b. Present value of a constant growing dividend stream.
Emmy lou, inc. has an expected dividend next year of $5.36 per share, a growth rate of
dividends of 6.75 percent, and a required return of 16.51 percent. What is the value of a
share of Emmy Lou Inc's common stock? Round to 2 decimal places.
Answer: $54.92
Math...
$5.36/ (16.51%-6.75%)
=$54.918
Harry corp. just laud a dividend of $10.18 and dividends are expected to grow at a constant
rate of 4.47 percent forever. If the required rate of return is 11.57 percent, what will harry
corp's stock sell for one year from now?
Answer: $156.48
Math...
1. $10.18*1.0447
=10.635046
with Correct Answers
Which of the following is a difference between common stock and bonds?
a. Stocks have a stated maturity but bonds do not.
b. Bondholders have a voice in management, common stockholders don't.
c. Bondholders have a senior claim on assets and income relative to stockholders.
d. Dividend paid to stockholders is tax-deductible but interest paid to bondholders are not.
c. Bondholders have a senior claim on assets and income relative to stockholders.
Regarding the corporation's tax treatment of payments to financial security holders, it is
true that ______.
a. Interest and preferred stock dividends are tax-deductible, while common stock dividends
are not tax-deductible.
b. Interest and preferred stock dividends are not tax-deductible, while common stock
dividends are tax-deductible.
c. Common stock dividends and preferred stock dividends are not tax-deductible, while
interest is tax deductible.
d. Common stock dividends and preferred stock dividends are tax-deductible, while
interest is not tax-deductible.
c. Common stock dividends and preferred stock dividends are not tax-deductible, while interest
is tax deductible.
In the gordon model, the value of the common stock is the _____
a. Present value of a non-growing dividend stream.
, b. Present value of a constant growing dividend stream.
c. Actual amount each common stockholder would expect to receive if the firm's assets are
sold.
d. Net value of all assets which are liquidated for their exact accounting value.
b. Present value of a constant growing dividend stream.
Emmy lou, inc. has an expected dividend next year of $5.36 per share, a growth rate of
dividends of 6.75 percent, and a required return of 16.51 percent. What is the value of a
share of Emmy Lou Inc's common stock? Round to 2 decimal places.
Answer: $54.92
Math...
$5.36/ (16.51%-6.75%)
=$54.918
Harry corp. just laud a dividend of $10.18 and dividends are expected to grow at a constant
rate of 4.47 percent forever. If the required rate of return is 11.57 percent, what will harry
corp's stock sell for one year from now?
Answer: $156.48
Math...
1. $10.18*1.0447
=10.635046
