[单选题]Winston Co. has a dividend yield of 5.4 percent and a total return for the year of 4.8 percent. Which one of the following must be true?
A. The dividend must be constant.
B. The stock has a negative capital gains yield.
C. The capital gains yield must be zero.
D. The required rate of return for this stock increased over the year.
E. The firm is experiencing supernormal growth.
Difficulty: 1 Easy
Topic: Stock dividends
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]The annual dividend yield is computed by dividing ________ annual dividend by the current stock price.
A. this year's
B. last year's
C. next year's
D. the past 5-year average
E. the next 5-year average
Difficulty: 1 Easy
Topic: Stock dividends
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]National Trucking has paid an annual dividend of $1 per share on its common stock for the past 15 years and is expected to continue paying a dollar a share long into the future. Given this, one share of the firm's stock is:
A. basically worthless as it offers no growth potential.
B. equal in value to the present value of $1 paid one year from today.
C. priced the same as a $1 perpetuity.
D. valued at an assumed growth rate of 1 percent.
E. worth $1 a share in the current market.
Difficulty: 1 Easy
Topic: Stock valuation using multiples
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]The dividend growth model:
A. is only as reliable as the estimated rate of growth.
B. can only be used if historical dividend information is available.
C. considers the risk that future dividends may vary from their estimated values.
D. applies only when a company is currently paying dividends.
E. is based solely on historical dividend information.
Difficulty: 1 Easy
Topic: Cost of equity
Learning Objective: 14-01 Determine a firm's cost of equity capital.

[单选题] In the generalized dividend valuation model, a stock's value depends only on
A. its future dividend payments and its future price.
B. its future dividend payments and the required return on equity.
C. its future price and the required return on investments on equity.
D. its future dividend payments.

[单选题]Dixie South currently pays an annual dividend of $1.46 a share and plans on increasing that amount by 2.75 percent annually. Northern Culture currently pays an annual dividend of $1.42 a share and plans on increasing its dividend by 3.1 percent annually. Given this information, you know for certain that the stock of Northern Culture has a higher ________ than the stock of Dixie South.
A. market price
B. dividend yield
C. capital gains yield
D. total return
E. real return
Difficulty: 1 Easy
Topic: Stock returns and yields
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]The primary advantage of using the dividend growth model to estimate a company's cost of equity is:
A. the ability to apply either current or future tax rates.
B. the model's applicability to all corporations.
C. is the model's consideration of risk.
D. the stability of the computed cost of equity over time.
E. the simplicity of the model.
Difficulty: 1 Easy
Topic: Cost of equity
Learning Objective: 14-01 Determine a firm's cost of equity capital.

[单选题]The two-stage dividend growth model evaluates the current price of a stock based on the assumption a stock will:
A. pay an increasing dividend for a period of time and then cease paying dividends altogether.
B. increase the dividend amount every other year.
C. pay a constant dividend for the first two quarters of each year and then increase the dividend the last two quarters of each year.
D. grow at a fixed rate for a period of time after which it will grow at a different rate indefinitely.
E. pay increasing dividends for a fixed period of time, cease paying dividends for a period of time, and then commence paying increasing dividends for an indefinite period of time.
Difficulty: 1 Easy
Topic: Two-stage growth stock
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]Answer this question based on the dividend growth model. If you expect the market rate of return to increase across the board on all equity securities, then you should also expect:
A. an increase in all stock values.
B. all stock values to remain constant.
C. a decrease in all stock values.
D. dividend-paying stocks to maintain a constant price while non-dividend paying stocks decrease in value.
E. dividend-paying stocks to increase in price while non-dividend paying stocks remain constant in value.
Difficulty: 1 Easy
Topic: Stock valuation using multiples
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]Which one of the following sets of dividend payments best meets the definition of two-stage growth as it applies to the two-stage dividend growth model?
A. No dividends for five years, then increasing dividends forever
B. $1 per share annual dividend for two years, then $1.25 annual dividends forever
C. Decreasing dividends for six years followed by one final liquidating dividend payment
D. Dividends payments that increase by 2, 3, and 4 percent respectively for three years followed by a constant dividend thereafter
E. Dividend payments that increase by 10 percent per year for five years followed by dividends that increase by 3 percent annually thereafter
Difficulty: 1 Easy
Topic: Two-stage growth stock
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]When using the two-stage dividend growth model:
A. g1 cannot be negative.
B. Pt = Dt/R.
C. g1 must be greater than g2.
D. g1 can be greater than R.
E. R must be less than g1 but greater than g2.
Difficulty: 1 Easy
Topic: Two-stage growth stock
Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth.

[单选题]6.The payment of a dividend by an American company to a foreign stockholder re presents:
A.A.a debit in the U.S.capital account
B.B.a credit in the U.S.capital account
C.C.a credit in the U.S.official reserve account
D.D.a debit in the U.S.current account

[判断题] International joint ventures tend to yield a welfare increasing market-power effect and a welfare decreasing cost-reduction effect.
A.正确
B.错误

[单选题] The current yield is a less accurate approximation of the yield to maturity the ________ the time to maturity of the bond and the ________ the price is from/to the par value.
A. shorter; closer
B. shorter; farther
C. longer; closer
D. longer; farther

[单选题]The current yield is defined as the annual interest on a bond divided by the:
A. coupon rate.
B. face value.
C. market price.
D. call price.
E. par value.
Difficulty: 1 Easy
Topic: Bond yields and returns
Learning Objective: 07-01 Define important bond features and types of bonds.

[简答题] The current yield on a bond is a good approximation of the bond's yield to maturity when the bond matures in five years or less and its price differs from its par value by a large amount.

[单选题] The current yield on a $5,000, 8 percent coupon bond selling for $4,000 is
A. 5%.
B. 8%.
C. 10%.
D. 20%.
E. none of the above.

[单选题] The current yield on a $6,000, 10 percent coupon bond selling for $5,000 is
A. 5%.
B. 10%.
C. 12%.
D. 15%.