Common Stock Chapter 7

Which of the following is not a characteristic of common stock?

Stockholders' equity includes all of the following except:

The market value of common stock is primarily based on

Common stockholders have a number of general rights, including all of the following except:

The book value of an asset represents

In a reverse stock split

Which of the following is not an advantage of common stock financing?

A change in the market price of an asset will occur as a result of changes in:

In the constant-growth dividend valuation model, the required rate of return must be ______ the dividend growth rate in order for the formula price to be meaningful.

In the constant-growth dividend valuation model, the required rate of return on a common stock can be shown to be equal to the sum of the dividend yield plus:

The valuation of common stock is considerably more complicated than the valuation of bonds or preferred stocks because:

In the valuation of common stock, the simple annuity and perpetuity formulas used in the valuation of bonds and preferred stock are not generally applicable because:

One of the assumptions of the constant growth dividend valuation model is that

The most important factor to be considered in the valuation of a closely held firm is

Stockholders' equity equals

A common stock's book value is calculated

From an accounting standpoint, stock dividends involve a transfer from the

Which one of the following is not a reason a firm may decide to repurchase its own stock?

The returns investors receive from holding common stocks may be in two forms. They are

The constant growth dividend valuation model does not hold when

If the general level of interest rates in the economy moves up, then investors will require a ______ rate of return on securities, and, in general, stock prices should ______, ceteris paribus.

If competition in an industry increases, the future growth potential should

The zero growth dividend valuation model is used when a firm's future dividends are expected to remain constant, ______

When evaluating a firm based on price/earnings multiples, the evaluator must determine the price/earnings multiple for

A firm that wishes to raise additional equity capital by selling a portion of the existing owners' stock while maintaining control of the firm should consider a ______.

A firm may use a stock repurchase ______

In the constant growth dividend valuation model, the required rate of return on a common stock is equal to the sum of the ______

In the constant growth dividend valuation model, it is assumed that the ______

An arrangement whereby an investment banker agrees to purchase an entire new issue of securities is called ______

The difference between the selling price to the public of a new issue and the net the issuing firm actually receives is known as the ______

All of the following are advantages of private security placements (over a public offering) except ______

A firm may sell its common stock directly to its existing stockholders through a ______

Direct issuance costs are ______

In marketing a new security issue, the investment banker assumes the risk of not being able to sell the security at a favorable price in each of the following cases except:

An investment banker is generally thought to be qualified to advise a corporation on a variety of matters, including all the following except:

In addition to direct costs, there are other costs associated with new security offerings. These other costs include all of the following except:

Which of the following are reasons why large multinational corporations may sell equity in international markets rather than selling stock only in the country in which they are domiciled?

The P/E ratio indicates

Common stock dividends normally are paid

In stock quotations, the last column, showing the net change, indicates the net change in

Many preferred stocks are treated as____in determining their values.

When a stock is split 2 for 1, then the____ figure on the firm's balance sheet is cut in half.

The rights of stockholders to share equally on a per share basis in any distributions of corporate earnings is known as ____.

____ result in what is known as treasury stock.

Listed below are some of the responsibilities of investment bankers. Which of the following is NOT one of them?

The zero growth method is used to value

The book value per share of common stock is calculated by dividing by the number of shares outstanding

All of the following are ways that securities are offered to the public in a public offering EXCEPT:

In a liquidation of a firm due to bankruptcy, which of the following usually gets paid last?

The returns from most common stocks are

Common stockholders’ claim on assets is considered after which of the following:

In valuing a company that sells products and services,____ is the most important factor in the valuation of closely held firms.

Of the following common stock rights, which allows common stockholders to buy more shares of common stock in order to retain their pro-rata share of ownership in the company?

Stock splits are:

All of the following are reasons that companies hold treasury stock EXCEPT: