Business Finance (4)

The company share market price is $25, its next-period expected dividend is $1 and investors in that market require a rate of return at 14% per annum. What is the implied rate of growth in dividends at this time?

• 14%

• 8%

• 9%

• 10%

The Australian Securities Exchange (ASX) is:

• one of the world's top 20 listed exchange groups, measured by its market capitalisation.

• a market solely for small and medium enterprises.

• a dealer market with a trading floor.

• made up of a primary market only

What is true about a preference share?

• the preference share is a form of equity from a legal standpoint.

• The preference share has preference over ordinary shares in the payment of dividends.

• Holders of the preference shares usually have no voting rights.

• All of the options given here are correct.

Next year's expected annual dividend divided by today's stock price is called the stock's:

• required return.

• dividend yield.

• maturity yield.

• capital gains yield.

The rate at which the value of an investment grows is called the:

• required return.

• dividend yield.

• capital return.

• capital gains yield.

The authority granted by a shareholder that permits another individual to vote that shareholder's shares is called a:

• straight vote.

• cumulative vote.

• statement.

• proxy.

The market in which new securities are originally sold to investors is called the _____ market.

• primary

• secondary

• open

• free

The market where one shareholder sells shares to another shareholder is called the _____ market.

• primary

• secondary

• open

• free

The current price of a share is based:

• primarily on the future value of the cash flows derived from the stock.

• solely on the anticipated future dividends.

• on the present value of all the future cash flows from that stock.

• strictly on the anticipated future stock price.

Which one of the following will increase the current value of a stock?

• Decrease in the dividend growth rate

• Increase in the required return

• Increase in the market rate of return

• Increase in the capital gains yield