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1) Which of the following are benefits related to stock ownership? L. ease oftrading II. attractive inflation-adjusted rates of return III. guarantee of long-term positive returns IV. affordability A)I and II only B) II and IV only C) I and III only D)I, II and IV only 2) An individual stock generally provides a A) dividend payment that ensures total protection from purchasing power risk B) refuge from event risk C) current income that is less predictable than that available from other types of investments. D) predictable annual rate of return. 3) The extraordinary run up in stock prices during the late 1990s primarily affected A) energy stocks. B) retail stocks. C) pharmaceutical stocks D) technology stocks When a corporation declares a stock split, it usually does so because A) the firm's retained eamings are excessive B) there are too many shares of stock outstanding. C) investors sometimes require nontaxable retums. D) it wants to make its stock more affordable to average investors. 5) Stock which has been is sued and subsequently reacquired by the issuing corporation is called A) letter stock B) treasury stock C) classified stock D) book stock 6) Factors considered in making a decision on a firm's dividend include the I. cash position of the firm. II. firm's growth prospects. III. the expectations of the shareholders. IV. minimum dividends required by law A) II and IV only B) I, and IV only C) I, II and III only D)I,I, and IV 7) Which of the following are typical characteristics of small cap stocks? I. strong balance sheets II. market cap less than S2 billion III potential for high returns along with high risk IV. potentially dramatic changes in their eamings A) III and IV only B) II and III only C) I, III and IV only D) II, III and IV only 8) Typical characteristics of growth stocks include A) rapidly growing dividends. B) high rates of growth in operations and earnings. C) acquisitions of competing companies. D) strong performance even in market downturns. 9) One characteristic of mid-cap stocks is that they A) are generally new firms with high growth potential B) tend to be highly volatile. C) are fairly good-sized companies that offer attractive return opportunities. D) are traded primarily through pink sheet bids. 10) Which category of stocks represents the highest level of risk? A) large-cap B) mid-cap C) baby blue D) small-cap 25 points 2017 Results Equation Anheuser Busch MillerCoors Current Ratio Quick Ratio Net Working Capital AR Turnover Inventory Turnover Total Asset Turnover Debt-Equity Ratio Equity Multiplier Times Interest eaned Net Profit Margin ROA ROE EPS Dividends payout ratio Book value per share Price to Book Value Which company had a better 2017 and how do you know? 5 points 11) Which of the following variables affect the P/E ratio? I. capital structure of a firm II. amount of dividends to be paid III. inflation rate IV. earnings rate of growth A)I, II and III only B)I, I and IV only C)I, IlI and IV only D)I, I II and IV 12) Which of the following will affect the firm's future cash flows? I. state of the economy II. state of the industry III. the firm's recent and current earnings IV. new products in the firm's pipel A)I, II and III only B)I, I and IV only C) I, III and IV only D) I, II, III and IV 13) Which of the following will most directly influence a company's market value? A) the state of the economy B) the book value of its assets C) the use of financial leverage D) its future cash flows 14) Even if a company does not officially follow a fixed-dividend policy, dividend payme are A) extremely difficult to predict. B) very volatile and subject to economic conditions. C) fairly stable from one time period to another D) directly tied to a company's P/E ratio 15) The major forces behind earnings per share are A) return on assets and total asset value B) gross revenue and the stock price C) growth and the number of shares outstanding. D) net income and the number of shares outstanding. 16) The intrinsic value of a stock provides a purchase price for the stock A) that is reasonable given the associated level of risk B) which will assuredly yield the anticipated capital gain. C) which will guarantee the expected rate of retun. D) that is always below the market value but yet yields the expected rate of retunm. 17) The nsk free rate is 2%. The expected rate of retum on the market is 12%. Beta and the expected rate of return for four stocks are as follows: ABC .8 , 10% DEF 1, 12%; GHI 1.2 , 13%, and JKL 2, 22%, which of these stocks should not be purchased? A) ABC B) DEF C) GHI D)JKL 18) In the Capital Asset Pricing Model, which of the following factors are used to determine the required rate of retum? the risk-free interest rate Il. future cash flows IIL. expected retum on the market portfolio IV. beta A)I and II only B) I andII only C)II, III and IV only D)I, III and IV only 19) An investor should purchase a stock whern A) the market price exceeds the intrinsic value B) the expected rate of return equals or exceeds the required return. C) the capital gains rate is less than the required return and no dividends are paid. D) the market price is greater than the justified price 20) The variable-growth dividend valuation model A) develops the value of a stock using the future value of dividends minus a rate of capital gain growth B) is valuable because it accounts for the general growth patterns of most companies. C) is invalid if at any point in time the growth rate exceeds the required rate of return. D) assumes the rate of dividend growth will vary indefinitely

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