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61.The market value of Bulldog Industries debt and preferred stock

Question : 61.The market value of Bulldog Industries debt and preferred stock : 1404048

 

 

61.The market value of Bulldog Industries debt and preferred stock is $934 million. If the firm has a weighted average cost of capital of 10%, find the equity value of the firm’s stock. The firm has 50 million shares of stock outstanding. (assume that we are at January 1, 2004…)

a.$14.63

b.$16.23

c.$17.03

d.$22.63

 

 

 

62.A firm plans on paying a constant dividend of $2 per share into the foreseeable future. If investors seek a 12% return to hold the firm’s stock, what is fair value for the company’s stock?

a.$13.67

b.$15.67

c.$16.67

d.$18.67

 

 

 

63.Which is NOT a feature of common stock?

a.Voting rights

b.Priority over debt holders for liquidation rights

c.Rights to dividends and other distributions

d.Majority voting system

 

 

 

64.After careful research, you find the present value of the free cash flows of a firm to be $100 million. The market value of the firm’s preferred stock is $15 million, while the market value of the firm’s debt is $40 million. If the firm has 2 million shares of stock outstanding, what is the equity value per share?

a.$20.00

b.$22.50

c.$27.50

d.$30.00

 

 

 

65.You estimate the following cash flows for Nick’s Incorporated: D1=$0.83, D2=$0.87, D3=$0.96, and P3=$27.40. If the required return to hold Nick’s stock is 15.1%, what is the price today for Nick’s stock?

a.$18.31

b.$18.85

c.$19.98

d.$20.35

 

 

 

66.What term refers to the number of shares issued by a firm multiplied by the current price of the shares on the secondary market?

a.Financial leverage

b.Market capitalization

c.Additional paid-in capital

d.Liquidation value

 

 

 

67.What is the term applied to several investment banks joining together to bring an IPO to market to limit risk exposure?

a.Selling group

b.Underwriting portfolio

c.Investment bank portfolio

d.Underwriting syndicate

 

 

 

68.What is the largest (trading volume) over-the-counter (OTC) market in the United States?

a.AMEX

b.NYSE

c.Nasdaq

d.Chicago Board of Trade

 

 

 

69.An investor bought a stock this morning for $50, and plans to sell the stock one year from today. The investor believes the stock will pay a $1 dividend during the next year, and that the stock can be sold for $53 in one year. Given the investor’s beliefs, what is the return from investing in this stock for the next year?

a.4%

b.6%

c.8%

d.10%

 

 

 

70.A share of preferred stock pays a $2 annual dividend, but pays the dividend in four equal quarterly installments. Investors seek a 12% annual percentage return on the investment. What price should the preferred stock trade?

a.$4.17

b.$6.67

c.$8.50

d.$16.67

 

 

 

 

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