Multiple Choice Answers

Better Built Homes stock is selling for $28 a share and has a current dividend yield of 1.2 percent. What is the amount of the last dividend paid if the dividend growth rate is 3.2 percent?
a. $0.33
b. $0.35
c. $0.37
d. $0.42

Dixie Hardware paid a dividend of $1.20 per share last year and has a policy of increasing its dividend by 2.5 percent annually. How much are you willing to pay to purchase one share of this stock considering that you require a 14 percent rate of return?
a. $10.43
b. $10.70
c. $10.96
d. $11.27

The Toy Store pays a constant annual dividend of $2.10 a share. The firm’s stock is selling for $48.90 a share and has a market return of 15.4 percent. What is the capital gains yield?
a. 10.67 percent
b. 11.11 percent
c. 13.56 percent
d. 13.84 percent

Yorktowne Pharmacy recently announced that it will pay annual dividends of $0.80, $0.92, and $1.10 a share over the next three years, respectively. After that, the firm plans to increase its dividend by 3 percent annually. What is one share of this stock worth to you today if you require a 12 percent rate of return?
a. $11.19
b. $11.81
c. $12.11
d. $12.46

Which one of the following statements is correct?
a. The preemptive right grants an individual the right to vote on behalf of a shareholder.
b. Dividends become a liability of the firm on the date of payment.
c. The stated value of most preferred stock is $1,000 per share.
d. A market maker on the floor of an exchange is called a specialist.