Question 91 What is the implied dividend growth rate for a firm with a return on equity (ROE) of 15%, a dividend payout ratio of 40%, and an investor discount rate of 11%? A) 4%. B) 9%. C) 6%. D) 12%.
Question 92 June Rutherford is preparing a research report on Andronicus Fund, an offshore hedge fund that specializes in identifying market pricing inefficiencies and profiting from the arbitrage opportunities they present. Rutherford includes these statements in her report: Statement 1: The rate of return that investors require from Andronicus should reflect the risk that the fund managers will not consistently capture positive abnormal returns from the anomalies they have identified. Statement 2: Arbitrage trading is unlikely to bring about fully efficient prices because Andronicus and other arbitrageurs will not trade if the gains to be captured are less than their transactions costs. Are Rutherford’s statements correct? Statement 1 Statement 2 A) Correct Incorrect B) Correct Correct C) Incorrect Correct D) Incorrect Incorrect
Question 93 An investor buys 1,000 shares of a non-dividend-paying stock for $18. The initial margin requirement is 40% and the maintenance margin is 30%. After one year the investor sells the stock for $24 per share. The investor's rate of return on this investment (ignoring borrowing and transactions costs and taxes), and the price at which the investor would receive a margin call, are closest to: Rate of return Margin call A) 33% $15.43 B) 83% $15.43 C) 33% $21.00 D) 83% $21.00 Question 94 Billie Blake is interested in a stock that has an expected dividend one year from today of $2.00, i.e., D1 = $2.00, D2 = $2.25 and D3 = 2.50. She expects to sell the stock for $38.00 at the end of year 3. The price is Billie will be willing to pay one year from today if investors require a 12% return on the stock is closest to: A) $34.30. B) $29.50. C) $32.40. D) $33.05. Question 95 Consider the following information for Magical Interactions, Inc. Earnings retention rate at 50% Required rate of return, ke, of 13% Return on equity (ROE) of 12%, expected to remain constant Estimated Sales per share of $150 Estimated EBIDTA profit margin of 18% Estimated Depreciation per share of $15 Estimated Interest Expense per share of $10 Corporate Tax Rate of 35% Current market price is $12.80 per share Based on the assumptions above, which of the following statements is most accurate? A) If inflation expectations decrease, the value of the stock will increase (all else equal). B) The stock is undervalued. C) If the earnings retention rate increases, the value of the stock will increase (all else equal). D) If management can increase the EBITDA ratio by only 1.0%, the stock will be properly priced (all else equal). | 
发表于 2008-11-6 18:14
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