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Which the the adhering to statements is TRUE?A. The Gordon growth Model assumes continuous dividend growth but implies that stock prices thrive at a different rate.B. A stock"s price is the current value the its future cash flows, namely, that is expected resources gains and also dividends. C. Brokers buy and also sell securities indigenous their own inventory, if dealers carry buyers and also sellers with each other to complete transactions. D. Holders of typical stock have greater voting rights in corporate decisions than holders of preferred stock, yet they have less voting civil liberties than creditor of the corporation.
Newly approve securities are offered to investor in which among the adhering to markets?A. ProxyB. InsideC. SecondaryD. Primary
Which that the following statements is FALSE?A. The bid price is the price that a dealer is willing to pay for a security and is reduced than the asking price.B. Bonds profession less commonly than stocks. C. In the share market, the an additional market is the sector where brand-new securities are originally sold to investor by the issuing company. D. Dividends obtained by corporations have a 70% to 100% exclusion from taxable income.
A broker is an certified dealer who:A. Trades on the floor of an exchange for himself or herself.B. Buys and sells indigenous inventory.C. Offers brand-new securities because that sale to dealers only.D. Bring buyers and sellers together.
Fill in the blanks: stock prices autumn if investor either intend _________ growth rates or need _________ returns.A. Higher, higherB. Higher, lowerC. Lower, higherD. Lower, lower
An agent who buys and sells securities indigenous inventory is referred to as a:A. SpecialistB. DealerC. BrokerD. Floor Trader
Which that the adhering to statements is FALSE?A. Unlike same holders, debt holders room not ownersB. Lenders deserve to exert regulate over a company"s supervisors by voting because that its plank of directors.C. A corporation can not deduct its payment to wanted shareholders before it pays taxesD. Holders of convertible bond can force bankruptcy if their coupons room not paid
(a) ABC just paid a $0.40 annual dividend intended to grow at 5% forever and its investors require 7.1% return. Estimate the price of ABC"s stock making use of the Gordon growth Model.(b) expect investors suddenly realize the ABC"s growth rate is actually only 4%. What will take place to its share price?
(a) P_0 =
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START is a young start-up company that is plowing its operation cash flows back into the agency and investing currently to fuel future cash flow growth. Due to the fact that of that, begin does not arrangement to pay dividends for the following 9 years, yet expects to salary its first dividend of $4.00 per share in year 10 and will increase the dividend by 4% per year thereafter. If investors need 12% return on this stock, what is its current share price?
Draw a time line to display that the an initial dividend come in year 10. The farming perpetuity formula calculates the worth one duration before the an initial cash flow, or in year 9. Therefore the an outcome needs to it is in discounted second 9 years to present. Per share todayP_0 = D_10/(r-g)/<(1+r)^9> = $4/(.12-.04)/<(1+.12)^9> = $18.03 per share today
) QWE, Inc., has an excellent issue of desired stock the pays a $5.20 dividend every year. If this issue right now sells because that $81.25 every share, calculation the return that investors call for on it at this time using the dividend discount model.
Since dividend on a preferred share carry out not grow, its compelled return is merely its dividend amount per year separated by its existing price, or$5.20 / $81.25 = 6.4% per year
Online Learning center to accompany Essentials that Investments8th EditionAlan J. Marcus, Alex Kane, Zvi Bodie