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1. As a rule, you should expect most stocks to have market

This answer was rated:

1.
As a rule, you should expect most stocks to have market prices that are below their book value.
A) True
B) False
2.
When investors say that the market is efficient, they mean that

A) securities consistently trade at prices very close to their intrinsic values.
B) the business cycles that underlie stock fluctuations occur in a somewhat predictable fashion.
C) the closing prices of all stocks can be found quickly and easily in the Wall Street Journal and in most daily newspapers.
D) industrial production, and overall productivity in the economy, is growing at a constant pace.
3.
Which of the following statements concerning technical indicators is FALSE?

A) The market is considered so strong as the number of stocks that advance in price on a given day exceeds the number that decline.
B) The market is expected to increase immediately when the volume of short sales begins to rise.
C) The stock market is considered strong when market volume falls during a market decline.
D) The market is expected to continue along its current trend when there is little difference between the volume of odd-lot purchases and sales.
4.
If a corporation declares a 10% stock dividend, then

A) the share price of the stock will most likely increase 10%.
B) each share holder will get a 10% cash rebate off his or her next round lot purchase of stock.
C) the share price of the stock will most likely decline 10%.
D) the share price of the stock will most likely remain unchanged.
5.
An internal rate of return (IRR) is the discount rate that

A) produces a present value of future benefits equial to the market price of the stock.
B) is the minimal rate that a buy-and-hold linvestor will accept.
C) represents the minimal rate than an individual investor will accept.
D) produces a future value equal to or greater than an investor's require rate of return.
6.
As a general rule, which of the following statements concerning the various values of common stock is correct?
A) Market values are usually below par values.
B) Book values are usually below market values.
C) Market values are usually below book values.
D) Par values are usually above book values.
7.
A total asset turnover of 3 means that every

A) total assets are replaced every 3 years.
B) $1 in sales is supported by $3 in assets.
C) $1 in assets produces $3 in sales.
D) $3 in assets produces $1 in net earnings.
8.
New Century, Inc. paid $2.10 in dividends per share last year. The company is expected to increase their annual dividends by 3% annually for the next 5 years. Mike as assigned a required rate of return of 13% to this stock. How much should Mike pay for one share of New Century stock?
A) $16.15
B) $16.64
C) $21.00
D) $21.63
9.
The consumer durables sector tends ot perform well when

A) the economy is in a recession.
B) interest rates are high.
C) disposable income is low.
D) unemployment rates are low.
10.
The constant-growth dividend valuation model is best suited for use with

A) small-cap stocks within growing industries.
B) the stocks of cyclical companies.
C) the stocks of mature companies.
D) stocks of new or emerging companies.
11.
Investors are most interested in which of the following ratios?

A) return on equity.
B) current ratio.
C) net profit margin.
D) return on assets.
12.
All else being equal, an investor will prefer a stock with a

A) constant P/E ratio.
B) stagnant P/E ratio.
C) falling P/E ratio.
D) rising P/E ratio.
13.
Stock dividends create taxable income at the time the dividend is declared.
A) True
B) False
14.
Treasury stock can be used to do all of the following EXCEPT

A) meet employee stock option plans.
B) reduce the interest expense of the firm.
C) pay stock dividends.
D) pay for mergers and acquisitions.
15.
If a firm has a return on assets (ROA) of 10% and a return on equity (ROE) of 10%, which of the following statements concerning this firm is correct?

A) The firm is losing money.
B) The operating results of the firm must be growing.
C) The firm must have enough cash on hand to pay some extra dividends.
D) The firm must have no financial leverage.
16.
The major forces behind earnings per share are

A) return on assets and total asset turnover.
B) return on assets and book value.
C) return on equity and book value.
D) return on equity and the equity multiples.
17.
Fundamental analysis rests on the belief that the value of a stock is influenced by the performance of the company that issued the stock.

A) True
B) False
18.
Intrinsic value is based on which of the following factors?

I. The applied discount rate

II. The amount of risk inherent in a particular stock

III. Historical net profits of the company

IV. Estimated future cash flows of the company

A) I, II and III only;
B) II and IV only;
C) I, II and IV only;
D) I, II, III and IV
19.
The greater the perceived risk of an asset, the lower the expected rate of return.
A) True
B) False
20.
On December 31, the Foxglove Company reported the following information on its financial statement
Hi

Welcome and Thanks for asking your questions. I can help you with these questions. Please let me know your deadline.

Regards
Customer: replied 4 years ago.

I need to submit my answers before 9:00pm tonight

I am working on them now and should post the solution in 30-40 minutes.

Also question 20 is incomplete. Please post it.
Customer: replied 4 years ago.



20.


On December 31, the Foxglove Company reported the following information on its financial statements: Total current assets = $240,000 Total long-term assets = $100,000 Total current liabilities = $80,000 Total long-term debt = $90,000 Stockholder's equity = $50,000. According to this information, Foxglove's current ratio is


A) 4.25
B)
1.80
C)
2.00
D)
3.00

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Customer: replied 4 years ago.

P6.2 An investor deposits $20,000 into a new brokerage account. The investor buys 1,00 shares of Tipco stock for $19 per share. Two weeks later, the investor sells the Tipco stock for $20 per share. When the investor receives his brokerage account statement, he sees that there is a balance of $20,900 in his account:


Item Number Price per Share Total Transaction Account Bal


1.Deposit $20,000 $20,000


2.Tipco


purchase 1,000 shares $19 ( $19,000) $20,000


3.Tipco sale 1,000 shares $20 $20,000 $21,000


4.



5.Balance $20,000



What belongs in item 4 on this statement?


 


P6.4 Lots ov’ Profit, Inc., is trading at $25 per share. There are 250 million shares outstanding. What is the market capitalization of this company?


 


P6.6 On January 1 2010, an investor bought 200 shares of Gottahavit, Inc., for $50 per share. On January 3 2011, the investor sold the stock for $55 per share. The stock paid quarterly dividend of $0.25 per share. How much (in $) did the investor earn on his investment, and, assuming the investor is in the 33% tax bracket, how much will she pay in income taxes on this transaction?


 


P6.8 East Coast Utilities is currently trading at $28 per share. The company pays quarterly dividend of $0.28 per share. What is the dividend yield?


 


P6.10 Wilfred Nadeau owns 200 shares of Consolidated Glue. The company’s board of directors recently declared a cash dividend of 50 cents a share payable April 18 ( a Wednesday) to shareholders of record on March 22 ( a Thursday).



  1. How much in dividends, if any, will Wilfred receive if he sells his stock on March 20?

  2. Assume Wilfred decides to hold onto the stock rather than sell it. If he belongs to the company’s dividend reinvestment plan, how many new shares of stock will he receive if the stock is currently trading at $40 and the plan offers a 5% discount on the share price of the stock? (assume that all of Wilfred’s dividends are diverted to the plan.) Will Wilfred have to pay any taxes on these dividends, given that he is taking them in stock rather than cash?


 


 


P6.12 Using the resources available at your campus or public library, or on the Internet, select any three common stocks you like and determine the latest book value per share, earnings per share, dividend payout ratio, and dividend yield for each. (Show all your calculation.)


 


P7.2 BOOKV has $750,000,000 in total assets no preferred stock, and total liabilities of $300,000,000. There are 300,000,000 shares of common stock outstanding. The stock is selling for $5.25 per share. What is the price-to-book ratio?


 


P8.2 Growth Co had sales of $55 million in 2008, and is expected to have sales of $83,650,000 for 2011. The company’s net profit margin was 5% in 2008, and is expected to increase 8% by by 2011. Estimate the company’s net profit for 2011.


 


P9.2 Listed below are data that pertain to the corporate bond market.


Period 1 Period 2 Period3 Period4


Average yield on 10 high-grade 5.30% 5.70% 5.10% ?


Corporate bonds


 


Yield on the Dow Jones average of 6.50% ? 6.00% 4.90% 40 corporate bonds


 


Yield spread (in basis points) ? 155 ? 25



 


Confidence index ? ? ? ?






  1. Compute the confidence index for each of the four periods listed above.

  2. Assume the latest confidence index (for period 0, in effect) amounts to 86.83%, while the yield spread between high – and average-grade corporate bonds is 85 basis points. Based on your calculations, what’s happening to bond yield spreads and the confidence index over the period of time covered in the problem (i.e., from period ) through period 4)?

  3. Based on the stock market? In which one or more periods (1 through 4 ) is the confidence index bullish? In which one(s) is it bearish?


 


 


 


P9.4 Below are figures representing the number of stocks making new highs and new lows for each month over a six-month period:


 


Month New Highs New Lows


July 117 22


August 95 34


September 84 41


October 64 79


November 53 98


December 19 101


____________________________________


 


Would a technical analyst consider the trend to be bullish or bearish over this period?


 


P9.6 At the end of trading day you find that the advance/decline ratio for the session was 1.2 What does that mean?


 


 


 


P9.8 You have collected the following NH-NL indicator data:



______Day NH-NL Indicator


1 (yesterday) 100


2 95


3 61


4 43


5 -15


6 -45


7 -82


8 -86


9 -92


10 -71


_______________________________________


 


If you are a technician following a momentum-based strategy, are you buying or selling today?


 


P9.10 You find the closing prices for a stock you own. You want to use a 10-day moving average to monitor the stock. Calculate the 10-day moving average for 10 days 11 through 20. Based on the data in the table below, are there any signals you should act on? Explain.


 


Day Closing Price Day Closing price


1 $25.25 11 $30.00


2 $26.00 12 30.00


3 $27.00 13 31.00


4 $28.00 14 31.50


5 $27.00 15 31.00


6 $28.00 16 32.00


7 $27.50 17 29.00


8 $29.00 18 29.00


9 $27.00 19 28.00


10 $28.00 20 27.00


Customer: replied 4 years ago.

Good Morning did you get my questions?


 

I thought you would be creating a new post.

 

I can answer them in this post itself please close the other open post so that you are not charged for that and once I post the solution you can rate this post so that I get credit.

 

Please let me know your deadline.

Customer: replied 4 years ago.

P6.2 An investor deposits $20,000 into a new brokerage account. The investor buys 1,00 shares of Tipco stock for $19 per share. Two weeks later, the investor sells the Tipco stock for $20 per share. When the investor receives his brokerage account statement, he sees that there is a balance of $20,900 in his account:


 


Item Number Price per Share Total Transaction Account Bal


 


1.Deposit $20,000 $20,000


 


2.Tipco


 


purchase 1,000 shares $19 ( $19,000) $20,000


 


3.Tipco sale 1,000 shares $20 $20,000 $21,000


 


4.


 




5.Balance $20,000



 


What belongs in item 4 on this statement?


 


 


 


P6.4 Lots ov’ Profit, Inc., is trading at $25 per share. There are 250 million shares outstanding. What is the market capitalization of this company?


 


 


 


P6.6 On January 1 2010, an investor bought 200 shares of Gottahavit, Inc., for $50 per share. On January 3 2011, the investor sold the stock for $55 per share. The stock paid quarterly dividend of $0.25 per share. How much (in $) did the investor earn on his investment, and, assuming the investor is in the 33% tax bracket, how much will she pay in income taxes on this transaction?


 


 


 


P6.8 East Coast Utilities is currently trading at $28 per share. The company pays quarterly dividend of $0.28 per share. What is the dividend yield?


 


 


 


P6.10 Wilfred Nadeau owns 200 shares of Consolidated Glue. The company’s board of directors recently declared a cash dividend of 50 cents a share payable April 18 ( a Wednesday) to shareholders of record on March 22 ( a Thursday).






    1. How much in dividends, if any, will Wilfred receive if he sells his stock on March 20?


 



    1. Assume Wilfred decides to hold onto the stock rather than sell it. If he belongs to the company’s dividend reinvestment plan, how many new shares of stock will he receive if the stock is currently trading at $40 and the plan offers a 5% discount on the share price of the stock? (assume that all of Wilfred’s dividends are diverted to the plan.) Will Wilfred have to pay any taxes on these dividends, given that he is taking them in stock rather than cash?





 


 


 


 


P6.12 Using the resources available at your campus or public library, or on the Internet, select any three common stocks you like and determine the latest book value per share, earnings per share, dividend payout ratio, and dividend yield for each. (Show all your calculation.)


 


 


 


P7.2 BOOKV has $750,000,000 in total assets no preferred stock, and total liabilities of $300,000,000. There are 300,000,000 shares of common stock outstanding. The stock is selling for $5.25 per share. What is the price-to-book ratio?


 


 


 


P8.2 Growth Co had sales of $55 million in 2008, and is expected to have sales of $83,650,000 for 2011. The company’s net profit margin was 5% in 2008, and is expected to increase 8% by by 2011. Estimate the company’s net profit for 2011.


 


 


 


P9.2 Listed below are data that pertain to the corporate bond market.


 


Period 1 Period 2 Period3 Period4


 


Average yield on 10 high-grade 5.30% 5.70% 5.10% ?


 


Corporate bonds


 


 


 


Yield on the Dow Jones average of 6.50% ? 6.00% 4.90% 40 corporate bonds


 


 


 


Yield spread (in basis points) ? 155 ? 25


 




 




Confidence index ? ? ? ?



 


 


 


 






    1. Compute the confidence index for each of the four periods listed above.


 



    1. Assume the latest confidence index (for period 0, in effect) amounts to 86.83%, while the yield spread between high – and average-grade corporate bonds is 85 basis points. Based on your calculations, what’s happening to bond yield spreads and the confidence index over the period of time covered in the problem (i.e., from period ) through period 4)?


 



    1. Based on the stock market? In which one or more periods (1 through 4 ) is the confidence index bullish? In which one(s) is it bearish?





 


 


 


 


 


 


P9.4 Below are figures representing the number of stocks making new highs and new lows for each month over a six-month period:


 


 


 


Month New Highs New Lows


 


July 117 22


 


August 95 34


 


September 84 41


 


October 64 79


 


November 53 98


 


December 19 101


 


____________________________________


 


 


 


Would a technical analyst consider the trend to be bullish or bearish over this period?


 


 


 


P9.6 At the end of trading day you find that the advance/decline ratio for the session was 1.2 What does that mean?


 


 


 


 


 


 


 


P9.8 You have collected the following NH-NL indicator data:


 


 


 


Day NH-NL Indicator


 


1 (yesterday) 100


 


2 95


 


3 61


 


4 43


 


5 -15


 


6 -45


 


7 -82


 


8 -86


 


9 -92


 


10 -71


 


_______________________________________


 


 


 


If you are a technician following a momentum-based strategy, are you buying or selling today?


 


 


 


P9.10 You find the closing prices for a stock you own. You want to use a 10-day moving average to monitor the stock. Calculate the 10-day moving average for 10 days 11 through 20. Based on the data in the table below, are there any signals you should act on? Explain.


 


 


 


Day Closing Price Day Closing price


 


1) $25.25 11) $30.00


 


2) $26.00 12) 30.00


 


3) $27.00 13) 31.00


 


4) $28.00 14) 31.50


 


5) $27.00 15) 31.00


 


6) $28.00 16) 32.00


 


7) $27.50 17) 29.00


 


8) $29.00 18) 29.00


 


9) $27.00 19) 28.00


 


10) $28.00 20) 27.00

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