金融市場(chǎng)與機(jī)構(gòu)-(11)

1、Chapter 11The Stock MarketMultiple Choice Questions1. (I) A share of common stock in a firm represents an ownership interest in that firm. (II) A share ofpreferred stock is as much like a bond as it is like common stock.(a) (I) is true, (II) false.(b) (I) is false, (II) true.(c) Both are true.(d) Bo

2、th are false. Answer: C2. Preferred stockholders hold a claim on assets that has priority over the claims of(a) both common stockholders and bondholders.(b) neither common stockholders nor bondholders.(c) common stockholders, but after that of bondholders.(d) bondholders, but after that of common st

3、ockholders. Answer: C3. (I) Preferred stockholders hold a claim on assets that has priority over the claims of commonstockholders, but after that of bondholders. (II) Firms issue preferred stock in far greater amounts than common stock.(a) (I) is true, (II) false.(b) (I) is false, (II) true.(c) Both

4、 are true.(d) Both are false.Answer: A4. (I) Preferred stockholders hold a claim on assets that has priority over the claims of commonstockholders. (II) Bondholders hold a claim on assets that has priority over the claims of preferred stockholders.(a) (I) is true, (II) false.(b) (I) is false, (II) t

5、rue.(c) Both are true.(d) Both are false.Answer: C5. (I) Firms issue com mon stock in far greater amounts tha n preferred stock. (II) The total volume ofstock issued is much less tha n the volume of bonds issued.(a) (I) is true, (II) false.(b) (I) is false, (II) true.(c) Both are true.(d) Both are f

6、alse.Answer: C6. The riskiest capital market security is(a) preferred stock.(b) com mon stock.(c) corporate bonds.(d) Treasury bon ds.Answer: B7. Orga ni zed excha nges acco unt for about stock shares traded.perce nt of the total dollar volume of domestic(a) 30(b) 45(c) 60(d) 70Answer: D8. Orga ni z

7、ed excha nges acco unt for aboutstocks traded.(a) 60(b) 70(c) 80(d) 90Answer: Bperce nt of the total dollar volume of domestic9. (I) The largest of the organized stock exchanges in the United States is the New York Stock Excha nge. (II) To be listed on the NYSE, a firm must have a minimum of $100 mi

8、llio n dollars in market value or $10 milli on in reve nu es.(a) (I) is true, (II) false.(b) (I) is false, (II) true.(c) Both are true.(d) Both are false.Answer: A10. To list o n the NYSE, a firm must(a) have earnings of at least $100 million for each of the last three years.(b) have at least $500 m

9、illion of market value and $100 million of revenue.(c) have a total of $100 million in market value of publicly traded shares.(d) meet all of the above requirements.(e) meet (a) and (b) of the above requirements.Answer: E11. Securities not listed on one of the excha nges trade in the over-the-co un

10、ter market. In this excha nge, dealers “ make a market by(a) buying stocks for inventory when investors want to sell.(b) selling stocks from inventory when investors want to buy.(c) doing both of the above.(d) doing neither of the above.Answer: C12. The most active stock excha nge in the world is th

11、e(a) Nikkei Stock Exchange.(b) London Stock Exchange.(c) Shanghai Stock Exchange.(d) New York Stock Exchange.Answer: A13. Which of the followi ng stateme nts about tradi ng operati ons in an orga ni zed excha nge are correct?(a) Floor traders all deal in a wide variety of stocks.(b) In most trades,

12、specialists match buy and sell orders.(c) In most trades, specialists buy for or sell from their own inventories.(d) The SuperDOT system is used to expedite large trades of over 100,000 shares.Answer: B14. Which of the followi ng is not an adva ntage of Electro nic Com mun icatio ns Networks (ECNs)?

13、(a) All unfilled orders are available for review by ECN traders.(b) Transactions costs are lower for ECN trades.(c) Trades are made and con firmed faster.(d) ECNs work well for thinly traded stocks.Answer: D15. Which of the followi ng stateme nts is false regard ing Electro nic Com mun icatio ns Net

14、works (ECNs)?(a) Archipelago and Instinet are two examples of ECNs.(b) Competition from ECNs has forced NASDAQ to cut its fees.(c) Traders ben efit from lower tradi ng costs and faster service.(d) ECNs allow institutional investors, but not individuals, to trade after hours.Answer: D16. A basic prin

15、 ciple of finance is that the value of any in vestme nt is(a) the prese nt value of all future net cash flows gen erated by the in vestme nt.(b) the un disco un ted sum of all future net cash flows gen erated by the in vestme nt.(c) un related to the future net cash flows gen erated by the in vestme

16、 nt.(d) un related to the degree of risk associated with the future net cash flows gen erated by the in vestme nt.17. A stock curre ntly sells for $25 per share and pays $0.24 per year in divide nds. What is an in vestorvaluation of this stock if she expects it to be selling for $30 in one year and

17、requires 15 percent return on equity in vestme nts?Answer: B18. A stock curre ntly sells for $30 per share and pays $1.00 per year in divide nds. What is an in vestor valuation of this stock if he expects it to be selling for $37 in one year and requires 12 percent return on equity in vestme nts?(a)

18、 $38Answer: D19. In the one-period valuation model, a stock' s value will be higher(a) the higher is its expected future price.(b) the lower is its divide nd.(c) the higher is the required return on investments in equity.(d) all of the above.Answer: A20. In the one-period valuation model, a stoc

19、k' s value falls if therises.(a) divide nd(b) expected future price(c) required return on equity(d) current priceAnswer: C21. In the gen eralized divide nd valuati on model a stock' s value depe nd only on(a) its future divide nd payme nts and its future price.(b) its future divide nd payme

20、nts and the required retur n on equity.(c) its future price and the required return on investments on equity.(d) its future divide nd payme nts.Answer: B22. Which of the following is not an element of the Gordon growth model of stock valuation?(a) the stock ' s most recent divide nd paid.(b) the

21、 expected con sta nt growth rate of divide nds.(c) the required return on investments in equity.(d) the stock ' s expected future price.23. According to the Gordon growth model, what is an investor' s valuation of a stock whose currentdivide nd is $1.00 per year if divide nds are expected to

22、 grow at a con sta nt rate of 10 perce nt over a long period of time and the investor' s required return is 11 percent?(a) $110(b) $100(c) $11(d) $10Answer: A24. According to the Gordon growth model, what is an investor' s valuation of a stock whose currentdivide nd is $1.00 per year if divi

23、de nds are expected to grow at a con sta nt rate of 10 perce nt over along period of time and the in vestor(a) $20(b) $11(c) $22's required return is 15 percent?Answer: C25.Holdi ng other thi ngs con sta nt, a stock's value will beividenMgifdwth rate is(a) 15 perce nt(b) 10 perce nt(c) 5 per

24、cent(d) 2 percentAnswer: A26.Holdi ng other thi ngs con sta nt, a stock's value will be highest if its most recent divide nd isAnswer: Bs value will be highest if the in vestors required r27. Holdi ng other thi ngs con sta nt, a stockin vestme nts in equity is(a) 20 percent(b) 15 perce nt(c) 10

25、perce nt(d) 5 percentAnswer: D28. Suppose the average industry PE ratio for auto parts retailers is 20. What is the current price of Auto Zone stock if the retailer' s earnings per share are projected to be $1.85?(b) $37Answer: B29. Which of the followi ng is true regard ing the Gordon growth mo

26、del?(a) Divide nds are assumed to grow at a con sta nt rate forever.(b) The divide nd growth rate is assumed to be greater tha n the required return on equity.(c) Both (a) and (b).(d) Neither (a) nor (b).Answer: A30. The PE ratio approach to val uing stock is especially useful for val uing(a) privat

27、ely held firms.(b) firms that don ' t pay divide nds.(c) both (a) and (b).(d) neither (a) nor (b).Answer: C31. The PE ratio approach to valuing stock is especially useful for valuing(a) publicly held corporations.(b) firms that regularly pay divide nds.(c) both (a) and (b).(d) neither (a) nor (b

28、).Answer: D32. A weak ness of the PE approach to val uing stock is that it is(a) difficult to estimate the con sta nt growth rate of a firm' s divide nds.(b) difficult to estimate the required return on equity.(c) difficult to predict how much a firm will pay in divide nds.(d) based on industry

29、averages rather than firm-specific factors.Answer: D33. A firm is expected to pay a divide nd of $1.00 n ext year and the divide nd is expected to grow at a con sta nt rate of 4 perce nt over time. Some in vestors have required returns on in vestme nts in equity of 12 perce nt, some 10 perce nt, and

30、 some 8 perce nt. The market price of this firmslightly above(a) $25(b) $1834. (I) The market price of a security at a given time is the highest value any investor puts on the security. (II) Superior in formati on about a security in creases its value by reduc ing its risk.(a) (I) is true, (II) is f

31、alse.(b) (I) is false, (II) is true.(c) Both are true.(d) Both are false.Answer: B35. The main cause of fluctuations in stock prices is changes in(a) tax laws.(b) errors in technical stock analysis.(c) daily trading volume in stock markets.(d) information available to investors.(e) total household w

32、ealth in the economy.Answer: D36. Stock values computed by valuati on models may differ from actual market prices because it is difficult to(a) estimate future divide nd growth rates.(b) estimate the risk of a stock.(c) forecast a stock ' s future divide nds.(d) all of the above are true.Answer:

33、 D37. The 2001 terrorist attacks and the Enron finan cial sca ndal caused an ticipated divide nd growth to, i nvestors ' required return on equity to, and stock prices to(a) decreases; in crease; decrease(b) decrease; in crease; in crease(c) in crease; decrease; decrease(d) in crease; decrease;

34、in creaseAnswer: A38. Which of the followi ng is not an objective of the Securities and Excha nge Commissi on?(a) maintain integrity of the securities markets(b) advise investors about which particular stocks are good buys(c) require firms to provide specific information to investors(d) regulate maj

35、or participants in securities marketsAnswer: BTrue/False1. More stock trading in the U.S. occurs in over-the-counter markets rather than on organized exchanges.An swer: FALSE2. In over-the-co un ter markets, dealers in creases the liquidity of thi nly traded securities.Answer: TRUE3. Electr onic Com

36、muni cati ons Networks apply tech no logy to make orga ni zed excha nges more efficie nt and speedy.An swer: FALSE4. All stocks pay divide nds, as that is the only way an in vestor can profit from holdi ng stock.An swer: FALSE5. Com mon stock is the riskiest corporate security, followed by preferred

37、 stock and the n bon ds. Answer: TRUE6. The Enron finan cial sca ndal in creased un certa inty about the quality of acco un ti ng in formati on and as a result in creased required retur n on in vestme nt in stocks.Answer: TRUE7. The Dow Jones In dustrial Average is the broadest and best in dicator of the stock market day-to-day performa nee.An swer: FALSE8. The Securities and Excha nge Commissi on requires firms