MFA2013 KMC Stock

Which one of following is the rate at which a stock's price is expected to appreciate?

• Current yield

• Total return

• Dividend yield

• Capital gains yield

A decrease in which of the following will increase the current value of a stock according to the dividend growth model?

• Dividend amount

• Number of future dividends, provided the total number of dividends is less than infinite

• Dividend growth rate

• Discount rate

The dividend growth model

• assumes dividends increase at a decreasing rate.

• cannot be used to value constant dividend stocks.

• can be used to value both dividend-paying and non-dividend-paying stocks.

• requires the growth rate to be less than the required return.

Which one of the following statements is correct?

• Stocks can only be assigned one dividend growth rate.

• Preferred stocks generally have variable growth rates.

• Dividend growth rates must be either zero or positive.

• Stocks can have negative growth rates.

Supernormal growth is a growth rate that

• is both positive and follows a year or more of negative growth.

• exceeds a firm's previous year's rate of growth.

• is generally constant for an infinite period of time.

• is unsustainable over the long term.

Which one of the following rights is never directly granted to all shareholders of a publicly held corporation?

• Electing the board of directors

• Receiving a distribution of company profits

• Voting either for or against a proposed merger or acquisition

• Determining the amount of the dividend to be paid per share

Which one of the following statements related to corporate dividends is correct?

• Dividends are nontaxable income to shareholders.

• Dividends reduce the taxable income of the corporation.

• The chief executive officer of a corporation is responsible for declaring dividends.

• Corporate shareholders may receive a tax break on a portion of their dividend income.

Preferred stock may have all of the following characteristics in common with bonds with the exception of:

• the lack of voting rights.

• a possible conversion option into common stock.

• annuity payments.

• tax-deductible payments.

Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings?

• Cumulative

• Non-cumulative

• Preferred

• Common

What are the distributions of either cash or stock to shareholders by a corporation called?

• Coupon payments

• Retained earnings

• Dividends

• Capital payments