Question 1

Which of the following statements is not true regarding cash dividends?

Accepted Answer

Cash dividends are not always paid semiannually. The frequency of dividend payments is determined by the board of directors and can vary from quarterly to annually or even irregularly.

Question 2

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-What is the dividend payout ratio for Rosa's?

Accepted Answer

The dividend payout ratio is calculated by dividing the dividends per share by the earnings per share. In this case, the dividends per share are $0.26 and the earnings per share are $2.00. Dividend payout ratio = $0.26 ÷ $2.00 = 0.13. Therefore, the answer is B.

Question 3

Rupert purchased 100 shares of Clarke Corporation for $28 a share last year.Clarke Corporation stock currently sells for $30 a share and pays $0.90 a share annually in cash dividends.What is the dividend yield on this stock?

Accepted Answer

Dividend yield is calculated by dividing the annual cash dividend per share by the current market price per share and multiplying it by 100.

Dividend yield = (Annual cash dividend per share / Current market price per share) x 100

In this case, the annual cash dividend per share is $0.9, and the current market price per share is $30.

Dividend yield = ($0.9 / $30) x 100 = 3.0%

Therefore, the correct option is C, which is 3.0 percent.

Question 4

A company's net worth is known as its ____ value.

Accepted Answer

A company's book value refers to its net worth, which is calculated by subtracting the total liabilities from the total assets. It is a measure of the company's total value based on its balance sheet. The other options - market value, par value, and intrinsic value, are not equivalent to a company's net worth.

Question 5

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-The book value of Rosa's is currently

Accepted Answer

The book value of a company is calculated by subtracting the total liabilities from the total assets. Without specific numbers for Rosa's assets and liabilities provided in the question, it's impossible to accurately determine the book value. Therefore, a correct answer cannot be provided based on the information given.

Question 6

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-What is the dividend payout ratio for Rosa's?

Accepted Answer

The dividend payout ratio is calculated by dividing the dividends per share by earnings per share. From the financial data given, the dividends per share are $0.50 and the earnings per share are $3.85. Dividing $0.50 by $3.85 gives a dividend payout ratio of 0.13, or 13%. Therefore, the best choice is B, with a dividend payout ratio of 0.13.

Question 7

MAX Corporation stock is currently selling for $38 a share,and it pays a quarterly dividend of $0.25.What is the dividend yield on MAX Corporation?

Accepted Answer

The dividend yield is calculated by dividing the annual dividend by the current stock price. The annual dividend is $0.25 per quarter times 4 quarters, which equals $1.00 per year. Dividing $1.00 by the current stock price of $38 gives a dividend yield of 0.0263, or 2.6 percent when expressed as a percentage.

Question 8

Gilbert and Associates,Inc.has a book value of $500,000,a market price per share of stock of $25,and 33,333 outstanding shares.What is its price-to-book ratio?

Accepted Answer

The answer of Gilbert and Associates,Inc.has a book value of...

Question 9

Employees can benefit from the appreciation in the stock in their company even if they put no money down if their employer offers

Accepted Answer

Employee stock options allow employees to purchase company stock at a set price, potentially benefiting from stock appreciation without initially investing their own money.

Question 10

MIN Corporation stock is currently selling for $52 a share,and it pays a quarterly dividend of $0.75.What is the dividend yield on MIN Corporation?

Accepted Answer

The dividend yield is calculated as the annual dividend payment divided by the current stock price.

First, we need to convert the quarterly dividend to an annual dividend:
Annual dividend = Quarterly dividend * 4 = $0.75 * 4 = $3

Next, we can calculate the dividend yield:
Dividend yield = Annual dividend / Stock price = $3 / $52 = 0.0577

To convert this to a percentage, we multiply by 100:
Dividend yield = 5.77%

Therefore, the correct answer is choice C, 5.8 percent.

Question 11

A company gives an employee the right and opportunity to exercise the option of an ESO by buying the stock sometime in the future at a ____ price established when the option was given.

Accepted Answer

The term for the price established when an option was given is "strike price" or "exercise price". Option holders can choose to exercise their ESOs by buying the stock at the predetermined strike price.

Question 12

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-What is the amount of Rosa's retained earnings?

Accepted Answer

The answer of Rosa's is a small chain of Mexican...

Question 13

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-On the basis of Rosa's price-to-sales ratio,would market analysts generally be positive toward this stock?

Accepted Answer

To determine if market analysts would generally be positive toward Rosa's stock on the basis of its price-to-sales ratio, we need to compare this ratio to industry averages. Assuming the industry average is around 1, a price-to-sales ratio of 0.85 is relatively low, implying that the stock may be undervalued. Therefore, market analysts may view the stock positively.

Question 14

Hill Country Pools,Inc.,had after-tax earnings of $750,000 and paid out dividends of $325,000.There are 275,000 shares of Hill Country Pools common stock outstanding with a current market value of $27 a share and no preferred stock.What is the dividend payout ratio for this company?

Accepted Answer

The dividend payout ratio is calculated as the dividends paid out divided by the net income.

Dividend payout ratio = Dividends / Net income

Net income = $750,000 
Dividends = $325,000

Dividend payout ratio = $325,000 / $750,000 = 0.43 or 43%

Therefore, the correct answer is B) 43 percent.

Question 15

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-What are the earnings per share for Rosa's?

Accepted Answer

The answer of Rosa's is a small chain of Mexican...

Question 16

A stock or mutual fund with a ____ beta means the security goes up when the market as a whole goes up average  when the market is rising ; a ____ beta indicates the opposite.

Accepted Answer

A stock or mutual fund with a positive beta means it moves in the same direction as the market as a whole, while a negative beta indicates it moves in the opposite direction of the market. Therefore, a security with a positive beta will go up when the market as a whole goes up, and a security with a negative beta will go down when the market as a whole goes up.

Question 17

The annual cash dividend return to an investor expressed as a percentage of the price of a security is a

Accepted Answer

Dividend yield is the annual cash dividend return to an investor expressed as a percentage of the price of a security. The other options are not the correct definition of this term. Stock dividend refers to the distribution of additional shares of a company's stock to its existing shareholders. Dividend payout ratio is the percentage of a company's earnings that are paid out as dividends. Dividend per share is the amount of dividend paid per share of a company's stock.

Question 18

Melissa owns 1,000 of the total 5 million shares outstanding in Utopia Corporation.Utopia just declared a $9 million dividend.How much dividend income will Melissa receive?

Accepted Answer

Melissa owns 1,000 shares out of 5 million shares outstanding. So, her ownership percentage is 1,000 / 5,000,000 = 0.0002. The total dividend declared is $9 million. So, Melissa's dividend income will be 0.0002 * $9 million = $1,800.

Question 19

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-What is the price-to-sales ratio for Rosa's?

Accepted Answer

The price-to-sales ratio is calculated by dividing the market capitalization by the total sales or revenue. Without specific figures for Rosa's market capitalization and sales, the correct choice is based on the given options.

Question 20

Rosa's is a small chain of Mexican food restaurants that features five delicious varieties of salsa. The business has grown over the past ten years from a hobby to a small corporation with 200,000 shares of common stock outstanding. The corporation has not issued any preferred stock. The following is Rosa's latest financial data:
 
-What is the price/earnings ratio for Rosa's?

Accepted Answer

The price/earnings (P/E) ratio is calculated by dividing the current market price of the stock by its earnings per share (EPS). Without specific numbers for Rosa's stock price or its earnings per share, we cannot directly calculate the P/E ratio. However, given that A) 9.3 is the correct answer, it implies that for every dollar of earnings, investors are willing to pay $9.30 for Rosa's stock. This is a fundamental financial metric used to gauge a company's valuation.

Quiz 14: Investing in Stocks and Bonds