金融場與機構11

1、Chapter11TheStockMarketMultipleChoiceQuestions1. (I)Ashareofcommonstockinafirmrepresentsanownershipinterestinthatfirm.(II)Ashareofpreferredstockisasmuchlikeabondasitislikecommonstock.(a) (I)istrue,(II)false.(b) (I)isfalse,(II)true.(c) Botharetrue.(d) Botharefalse.Answer:C2. Preferredstockholdershold

2、aclaimonassetsthathaspriorityovertheclaimsof(a) bothcommonstockholdersandbondholders.(b) neithercommonstockholdersnorbondholders.(c) commonstockholders,butafterthatofbondholders.(d) bondholders,butafterthatofcommonstockholders.Answer:C3. (I)Preferredstockholdersholdaclaimonassetsthathaspriorityovert

3、heclaimsofcommonstockholders,butafterthatofbondholders.(II)Firmsissuepreferredstockinfargreateramountsthancommonstock.(a) (I)istrue,(II)false.(b) (I)isfalse,(II)true.(c) Botharetrue.(d) Botharefalse.Answer:A4. (I)Preferredstockholdersholdaclaimonassetsthathaspriorityovertheclaimsofcommonstockholders

4、.(II)Bondholdersholdaclaimonassetsthathaspriorityovertheclaimsofpreferredstockholders.(a) (I)istrue,(II)false.(b) (I)isfalse,(II)true.(c) Botharetrue.(d) Botharefalse.5. (I)Firmsissuecommonstockinfargreateramountsthanpreferredstock.(II)Thetotalvolumeofstockissuedismuchlessthanthevolumeofbondsissued.

5、(a) (I)istrue,(II)false.(b) (I)isfalse,(II)true.(c) Botharetrue.(d) Botharefalse.Answer:C6. Theriskiestcapitalmarketsecurityis(a) preferredstock.(b) commonstock.(c) corporatebonds.(d) Treasurybonds.Answer:B7. Organizedexchangesaccountforaboutpercentofthetotaldollarvolumeofdomesticstocksharestraded.(

6、a) 30(b) 45(c) 60(d) 70Answer:D8. Organizedexchangesaccountforaboutpercentofthetotaldollarvolumeofdomesticstockstraded.(a) 60(b) 70(c) 80(d) 90Answer:B9. (I)ThelargestoftheorganizedstockexchangesintheUnitedStatesistheNewYorkStockExchange.(II)TobelistedontheNYSE,afirmmusthaveaminimumof$100milliondoll

7、arsinmarketvalueor$10millioninrevenues.(a) (I)istrue,(II)false.(b) (I)isfalse,(II)true.(c) Botharetrue.(d) Botharefalse.Answer:A10. TolistontheNYSE,afirmmust(a) haveearningsofatleast$100millionforeachofthelastthreeyears.(b) haveatleast$500millionofmarketvalueand$100millionofrevenue.(c) haveatotalof$

8、100millioninmarketvalueofpubliclytradedshares.(d) meetalloftheaboverequirements.(e) meet(a)and(b)oftheaboverequirements.Answer:11. Securitiesnotlistedononeoftheexchangestradeintheover-the-countermarket.Inthisexchange,dealers“makeamarket”by(a) buyingstocksforinventorywheninvestorswanttosell.(b) selli

9、ngstocksfrominventorywheninvestorswanttobuy.(c) doingbothoftheabove.(d) doingneitheroftheabove.Answer:C12. Themostactivestockexchangeintheworldisthe(a) NikkeiStockExchange.(b) LondonStockExchange.(c) ShanghaiStockExchange.(d) NewYorkStockExchange.Answer:A13. Whichofthefollowingstatementsabouttrading

10、operationsinanorganizedexchangearecorrect?(a) Floortradersalldealinawidevarietyofstocks.(b) Inmosttrades,specialistsmatchbuyandsellorders.(c) Inmosttrades,specialistsbuyfororsellfromtheirowninventories.(d) TheSuperDOTsystemisusedtoexpeditelargetradesofover100,000shares.Answer:B14. Whichofthefollowin

11、gisnotanadvantageofElectronicCommunicationsNetworks(ECNs)?(a) AllunfilledordersareavailableforreviewbyECNtraders.(b) TransactionscostsarelowerforECNtrades.(c) Tradesaremadeandconfirmedfaster.(d) ECNsworkwellforthinlytradedstocks.Answer:D15. WhichofthefollowingstatementsisfalseregardingElectronicComm

12、unicationsNetworks(ECNs)?(a) ArchipelagoandInstinetaretwoexamplesofECNs.(b) CompetitionfromECNshasforcedNASDAQtocutitsfees.(c) Tradersbenefitfromlowertradingcostsandfasterservice.(d) ECNsallowinstitutionalinvestors,butnotindividuals,totradeafterhours.Answer:D16. Abasicprincipleoffinanceisthatthevalu

13、eofanyinvestmentis(a) thepresentvalueofallfuturenetcashflowsgeneratedbytheinvestment.(b) theundiscountedsumofallfuturenetcashflowsgeneratedbytheinvestment.(c) unrelatedtothefuturenetcashflowsgeneratedbytheinvestment.(d) unrelatedtothedegreeofriskassociatedwiththefuturenetcashflowsgeneratedbytheinves

14、tment.17. Astockcurrentlysellsfor$25pershareandpays$0.24peryearindividends.Whatisaninvestorvaluationofthisstockifsheexpectsittobesellingfor$30inoneyearandrequires15percentreturnonequityinvestments?(a) $30.24(b) $26.30(c) $26.09(d) $27.74Answer:B18. Astockcurrentlysellsfor$30pershareandpays$1.00perye

15、arindividends.Whatisaninvestorvaluationofthisstockifheexpectsittobesellingfor$37inoneyearandrequires12percentreturnonequityinvestments?(a) $38(b) $33.50(c) $34.50(d) $33.93Answer:D19. Intheone-periodvaluationmodel,astock'svaluewillbehigher(a) thehigherisitsexpectedfutureprice.(b) thelowerisitsdi

16、vidend.(c) thehigheristherequiredreturnoninvestmentsinequity.(d) alloftheabove.Answer:A20. Intheone-periodvaluationmodel,astock'svaluefallsiftherises.(a) dividend(b) expectedfutureprice(c) requiredreturnonequity(d) currentpriceAnswer:C21. Inthegeneralizeddividendvaluationmodelastock'svaluede

17、pendonlyon(a) itsfuturedividendpaymentsanditsfutureprice.(b) itsfuturedividendpaymentsandtherequiredreturnonequity.(c) itsfuturepriceandtherequiredreturnoninvestmentsonequity.(d) itsfuturedividendpayments.Answer:B22. WhichofthefollowingisnotanelementoftheGordongrowthmodelofstockvaluation?(a) thestoc

18、k'smostrecentdividendpaid.(b) theexpectedconstantgrowthrateofdividends.(c) therequiredreturnoninvestmentsinequity.(d) thestock'sexpectedfutureprice.23. AccordingtotheGordongrowthmodel,whatisaninvestor'svaluationofastockwhosecurrentdividendis$1.00peryearifdividendsareexpectedtogrowatacons

19、tantrateof10percentoveralongperiodoftimeandtheinvestor'srequiredreturnis11percent?(a) $110(b) $100(c) $11(d) $10(e) $5.24Answer:A24. AccordingtotheGordongrowthmodel,whatisaninvestor'svaluationofastockwhosecurrentdividendis$1.00peryearifdividendsareexpectedtogrowataconstantrateof10percentover

20、alongperiodoftimeandtheinvestor'srequiredreturnis15percent?(a) $20(b) $11(c) $22(d) $7.33(e) $4.40Answer:C25. Holdingotherthingsconstant,astock'svaluewillbehighestifitsdividendgrowthrateis(a) 15percent(b) 10percent(c) 5percent(d) 2percentAnswer:AsvaluewitsbBdsgheentdividendissvaluewillbehigh

21、estiftheinvestorsrequiredr26. Holdingotherthingsconstant,astock(a) $2.00(b) $5.00(c) $0.50(d) $1.00Answer:B27. Holdingotherthingsconstant,astockinvestmentsinequityis(a)20percent(b)15percent(c)10percent(d)5percent28. SupposetheaverageindustryPEratioforautopartsretailersis20.WhatisthecurrentpriceofAut

22、oZonestockiftheretailer'searningspershareareprojectedtobe$1.85?$21.85(b) $37(c) $10.81(d) $9.25Answer:B29. WhichofthefollowingistrueregardingtheGordongrowthmodel?(a) Dividendsareassumedtogrowataconstantrateforever.(b) Thedividendgrowthrateisassumedtobegreaterthantherequiredreturnonequity.(c) Bot

23、h(a)and(b).(d) Neither(a)nor(b).Answer:A30. ThePEratioapproachtovaluingstockisespeciallyusefulforvaluing(a) privatelyheldfirms.(b) firmsthatdon'tpaydividends.(c) both(a)and(b).(d) neither(a)nor(b).Answer:C31. ThePEratioapproachtovaluingstockisespeciallyusefulforvaluing(a) publiclyheldcorporation

24、s.(b) firmsthatregularlypaydividends.(c) both(a)and(b).(d) neither(a)nor(b).Answer:D32. AweaknessofthePEapproachtovaluingstockisthatitis(a) difficulttoestimatetheconstantgrowthrateofafirm'sdividends.(b) difficulttoestimatetherequiredreturnonequity.(c) difficulttopredicthowmuchafirmwillpayindivid

25、ends.(d) basedonindustryaveragesratherthanfirm-specificfactors.Answer:D33. Afirmisexpectedtopayadividendof$1.00nextyearandthedividendisexpectedtogrowataconstantrateof4percentovertime.Someinvestorshaverequiredreturnsoninvestmentsinequityof12percent,some10percent,andsome8percent.Themarkepriceofthisfir

26、m'sstockwillbeslightlyabove(a)$25(b)$18(c)$16.67(d)$12.5034. (I)Themarketpriceofasecurityatagiventimeisthehighestvalueanyinvestorputsonthesecurity.(II)Superiorinformationaboutasecurityincreasesitsvaluebyreducingitsrisk.(a) (I)istrue,(II)isfalse.(b) (I)isfalse,(II)istrue.(c) Botharetrue.(d) Botha

27、refalse.Answer:B35. Themaincauseoffluctuationsinstockpricesischangesin(a) taxlaws.(b) errorsintechnicalstockanalysis.(c) dailytradingvolumeinstockmarkets.(d) informationavailabletoinvestors.(e) totalhouseholdwealthintheeconomy.Answer:D36. Stockvaluescomputedbyvaluationmodelsmaydifferfromactualmarket

28、pricesbecauseitisdifficultto(a) estimatefuturedividendgrowthrates.(b) estimatetheriskofastock.(c) forecastastock'sfuturedividends.(d) alloftheabovearetrue.Answer:D37. The2001terroristattacksandtheEnronfinancialscandalcausedanticipateddividendgrowthto,investors'requiredreturnonequityto,andsto

29、ckpricesto(a) decreases;increase;decrease(b) decrease;increase;increase(c) increase;decrease;decrease(d) increase;decrease;increaseAnswer:A38. WhichofthefollowingisnotanobjectiveoftheSecuritiesandExchangeCommission?(a) maintainintegrityofthesecuritiesmarkets(b) adviseinvestorsaboutwhichparticularsto

30、cksaregoodbuys(c) requirefirmstoprovidespecificinformationtoinvestors(d) regulatemajorparticipantsinsecuritiesmarketsAnswer:BTrue/False1. MorestocktradingintheU.S.occursinover-the-countermarketsratherthanonorganizedexchanges.Answer:FALSE2. Inover-the-countermarkets,dealersincreasestheliquidityofthin

31、lytradedsecurities.Answer:TRUE3. ElectronicCommunicationsNetworksapplytechnologytomakeorganizedexchangesmoreefficientandspeedy.Answer:FALSE4. Allstockspaydividends,asthatistheonlywayaninvestorcanprofitfromholdingstock.Answer:FALSE5. Commonstockistheriskiestcorporatesecurity,followedbypreferredstocka

32、ndthenbonds.Answer:TRUE6. TheEnronfinancialscandalincreaseduncertaintyaboutthequalityofaccountinginformationandasaresultincreasedrequiredreturnoninvestmentinstocks.Answer:TRUE7. TheDowJonesIndustrialAverageisthebroadestandbestindicatorofthestockmarketday-to-dayperformance.Answer:FALSE8. TheSecuritiesandExchan