ExamVeda
Login
Home
1
An expected rate of return is subtracted from capital gains yield to calculate
Discuss
Answer & Solution
Answer: Option A
Solution:
An expected rate of return is subtracted from capital gains yield to calculate expected dividend yield. The dividend yield is the ratio of a company's annual dividend compared to its share price.
2
An expected dividend yield is subtracted from an expected rate of return which is used to calculate
Discuss
Answer & Solution
Answer: Option B
Solution:
An expected dividend yield is subtracted from an expected rate of return which is used to calculate capital gains yield. Capital gains yield is the percentage price appreciation on an investment.
3
First step in calculating value of stock with non-constant growth rate is to
Discuss
Answer & Solution
Answer: Option A
Solution:
First step in calculating value of stock with non-constant growth rate is to estimate expected dividend. Dividend yield refers to a stock's annual dividend payments to shareholders, expressed as a percentage of the stock's current price.
4
Calculation of formula in common stock valuation does not include
Discuss
Answer & Solution
Answer: Option C
Solution:
Calculation of formula in common stock valuation does not include number of stock issued. Common stock valuation is the process of determining the value of a share of stock in a company. The holder of one share in a company that has one million shares outstanding is actually the owner of one-millionth of the company; the value of that share should represent that percentage of the company's worth.
5
An expected dividend yield is 7.5% and an expected rate of return is 15.5% then constant growth rate will be
Discuss
Answer & Solution
Answer: Option B
Solution:
Constant growth rate = Expected rate of return - Expected dividend yield
= 15.5% - 7.5% = 8.00%
6
Average rate of return which is required by all investors of company is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Average rate of return which is required by all investors of company is classified as weighted average cost of capital. The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All sources of capital, including common stock, preferred stock, bonds, and any other long-term debt, are included in a WACC calculation.
7
An actual rate of return is subtracted from expected growth rate then it is divided from dividend stockholders expects use for calculating
Discuss
Answer & Solution
Answer: Option C
Solution:
An actual rate of return is subtracted from expected growth rate then it is divided from dividend stockholders expects use for calculating constant growth model. The Gordon Growth Model is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. It is a popular and straightforward variant of a dividend discount model (DDM).
8
Value of stock is Rs 900 and required rate of return is 30% then preferred dividend will be
Discuss
Answer & Solution
Answer: Option A
Solution:
Preferred dividend = Value of stock * Required rate of return
= Rs. 900 * 30% = Rs. 270.
9
A situation in which an outside group solicit proxies to take control of business is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
A situation in which an outside group solicit proxies to take control of business is classified as proxy fight. A proxy fight is the action of a group of shareholders joining forces, in a bid to gather enough shareholder proxies to win a corporate vote.
10
A stock which is issued to meet specific needs of company is considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
A stock which is issued to meet specific needs of company is considered as classified stock. Classified stock is a type of common stock that has special privileges, such as enhanced voting rights or dividend rights.