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DeHan Fin. Ch. 7
Finance Ch. 7 Review
| Question | Answer |
|---|---|
| A publicly owned corporation is simply a company whose shares are help by the investing public, which may include other corporations and institutions. (True or False?) | True |
| A stock's par value is equal to the market value of the stock on the last day of the fiscal year for a firm. (True or False?) | False |
| One advantage of using common stock as a source of funds is that common stock does not legally obligate the firm to make payments to stockholders. (True or False?) | True |
| According to the textbook model, under conditions of non constant growth, the discount rate utilized to find the present value of the expected cash flows will be the same for the initial growth period as for the normal growth period. (True or False?) | True |
| Other things held constant, P/E ratios are higher for firms with higher growth prospects. At the same time, P/E's are lower for riskier firms, other things held constant. These two factors, growth prospects and riskiness, may either be offsetting or reinf | True |
| Shareholders exert control of the management of the firm by? | Electing board members who can replace management. |
| When using the Dividend Growth Model, assuming that growth (g) will remain constant, the divided yield is a good measure of the required return on a common stock under which of the following circumstances? | g=0 |
Created by:
sfrase
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