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FINANCE 300 FINAL EXAM FINALLY RELEASED 2025
one year ago, you purchased 400 shares of stock for $12/share. the stock pays $.22 a share in dividends each year. today, you sold your shares for $28.30/share. what is your total dollar return on this investment? - total dollar return= # of shares you purchased * (what you sold your shares for today - what you paid for one share a year ago + the dividend). 400* ($28.30-$12+.$22)= $6, one year ago, you bought a stock for $36.48 a share. you received a dividend of $1.62/share last month and sold the stock today for $40.18. what is the capital gains yield on the investment? - capital gains yield= (end price-beg price)/ beg price (40.18-36.48)/36.48= 10. neal purchased 3,600 shares of stock for $101,124. today, he sold those shares for $26.60/share. what is the total return on investment if the dividend yield is 1.7%. - purchase price=what you paid for stock/# of shares total return= [(purchase price-what you sold stock for today/what you sold stock for today]+dividend purchase price= 101,124/3600=28. total return= [(26.60-28.06)/28.09}+.017=-3.
over the last 5 years, a stock returned 8.3%, - 32.5%, - 2.2%, 46.9%, and 11.8%. what is the variance of these returns? - average return= add all up then divide by number of returns variance= [(return-ave. return)^2 + (return-ave. return)^2 (etc)] * 4 ave. return= (.083-.325-.022+.0469_.118)/5=. variance=. Over the past six years, a stock had annual returns of 14 percent, - 3 percent, 8 percent, 21 percent, - 16 percent, and 4 percent, respectively. What is the standard deviation of these returns? - Average return = (0.14 - 0.03 + 0.08 + 0.21 - 0.16 + 0.04)/6 = 0. for standard deviation take the variance and raise it to. You purchased 1,300 shares of LKL stock 5 years ago and have earned annual returns of 7.1 percent, 11.2 percent, 3.6 percent, - 4.7 percent and 11.8 percent. What is your arithmetic average return? - Arithmetic average = (0.071 + 0.112 + 0.036 - 0.047 + 0.118)/5 = 5.80 percent The common stock of Western Hill Farms has yielded 16.3 percent, 7. percent, 11.8 percent, - 3.6 percent, and 9.9 percent over the past five years, respectively. What is the geometric average return? -
The return earned in an average year over a multi-year period is called the _____ average return. - arithmetic Assume that the market prices of the securities that trade in a particular market fairly reflect the available information related to those securities. Which one of the following terms best defines that market? - efficient capital market Which one of the following types of securities has no priority in a bankruptcy proceeding? - common stock Newly issued securities are sold to investors in which one of the following markets? - primary The price of a stock at year 4 can be expressed as: - D5/(R-g). Donuts Delite just paid an annual dividend of $1.10 a share. The firm expects to increase this dividend by 8 percent per year the following 3 years and then decrease the dividend growth to 2 percent annually thereafter. Which one of the following is the correct computation of the dividend for year 7? - ($1.10) (1.08)3 (1.02)
Taylor Tools is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a $9 per share dividend in year 8 and will increase the dividend by 4 percent per year thereafter. If the required return on this stock is 12 percent, what is the current share price? - P7 = $9/(0.12 - 0.04) = $112. P0 = $112.50/(1 + 0.12)^7 = $50. Gamma Corp. is expected to pay the following dividends over the next four years: $5, $12, $18, and $1.80. Afterwards, the company pledges to maintain a constant 4 percent growth rate in dividends, forever. If the required return on the stock is 14 percent, what is the current share price? - P4 = ($1.80 × 1.04)/(0.14 - 0.04) = $18. P0 = ($5/1.14) + ($12/1.142) + ($18/1.143) + [($1.80 + $18.72)/1.1 44] = $37. If shareholders are granted a preemptive right they will: - have priority in the purchase of any newly issued shares. A preferred stock sells for $48.20 a share and has a market return of 15.65 percent. What is the dividend amount? - dividend= return X price of stock dividend=.15655 X 48.20-$7.
5 percent annually. What is a share of this stock worth today at a required return of 15 percent? - P0 = ($0.90 × (1 - 0.05)/[0.15 − (- 0.05] = $4. Kate could not attend the last shareholders meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kate's shares were voted? - proxy The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.28 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. Required: (a) If investors require a 12 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price? $27.39 - The constant dividend growth model is: Pt = Dt × (1 + g) / (R - g) So the price of the stock today is: P0 = D0 (1 + g) / (R - g) = $1.28 (1.07) / (.12 - .07) = $27.
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.28 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. What will the price be in 11 years? $57.66 - We can do the same thing to find the dividend in Year 12, which gives us the price in Year 11, so: P11 = D11 (1 + g) / (R - g) = D0 (1 + g)12 / (R - g) = $1.28 (1.07)12 / (.12 - .07) = $57. Metroplex Corporation will pay a $5.10 per share dividend next year. The company pledges to increase its dividend by 3.10 percent per year indefinitely. Required: If you require an 5.90 percent return on your investment, how much will you pay for the company's stock today? - P0 = D1 / (R- g) = $5.10/(.059 - .031) = $182. Which one of the following is computed by dividing next year's annual dividend by the current stock price? - dividend yield The next dividend payment by Blue Cheese, Inc., will be $1.89 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $38 per share, what is the
