- Which of the following statements regarding preferred stock is true?Multiple Choice
- Holders of preferred stock have the same voting rights as common stockholders.
- Preferred stock dividend payments are a deductible expense for corporate tax purposes.
- Almost all public corporations are at least partly financed with preferred stock.
- A) None of the options are correct.
2. What would be the carried interest (at 20%) on a private equity portfolio with an initial value of $500 million that was subsequently liquidated for $750 million?
Multiple Choice
- A) $50 million
- $100 million
- $150 million
- $250 million
3. Which of the following statements are true?
- Underwriters help private companies access public stock markets through IPOs.
- Shelf registrations and private placements are examples of seasoned security issues.
- Issue costs for debt are typically greater than issue costs for equity.
- Bearer bonds make it easier for investors to avoid paying taxes on interest income.
Multiple Choice
None of the options are correct.
1 and 2 only
1 and 3 only
A) 1, 2, and 4 only
1, 3, and 4 only
1, 2, 3, and 4
4. Carbon8 Corporation wants to raise $120 million in a seasoned equity offering, net of all fees. Carbon8 stock currently sells for $28.00 per share. The underwriters will require a fee of $1.25 per share and indicate that the issue must be underpriced by 7.5%. In addition to the underwriter’s fee, the firm will incur $785,000 in legal, administrative, and other costs. How many shares must Carbon8 sell in order to raise the desired amount of capital?Multiple Choice
A) 4.9 million
4.3 million
4.5 million
4.6 million
5. At the end of 2020, Crane Industries, Incorporated stock price was $30.75. A year later, it was $34.88. Per share dividends over the year were $0.55, while earnings per share were $1.33. What rate of return did the common stockholders earn in 2021?Multiple Choice
None of the options are correct.
1.79%
4.33%
13.43%
A) 15.22%
17.76%
6. At the end of 2020, Crane Industries, Incorporated stock price was $30.75. A year later, it was $34.88. Per share dividends over the year were $0.55, while earnings per share were $1.33. What was Crane’s dividend yield in 2021?Multiple Choice
None of the options are correct.
A) 1.79%
4.33%
13.43%
15.22%
17.76%
7. At the end of 2020, Crane Industries, Incorporated stock price was $30.75. A year later, it was $34.88. Per share dividends over the year were $0.55, while earnings per share were $1.33. What was the percentage change in the share price in 2021?Multiple Choice
None of the options are correct.
1.79%
4.33%
A) 13.43%
15.22%
17.76%
8. Which of the following would allow a corporation to issue a bond at a lower coupon rate, all else equal?
None of the options are correct.
9. Which of the following statements related to market efficiency tend to be supported by current evidence?
- Markets tend to respond quickly to new information.
- It is difficult for the typical investor to earn above-average returns without taking above-average risks.
- Short-run prices are difficult to predict accurately based on public information.
- Markets are most likely strong-form efficient.
Multiple Choice
1, 2, 3, and 4
1 and 3 only
2 and 4 only
1 and 4 only
1, 3, and 4 only
A) 1, 2, and 3 only
10. Individuals who continually monitor the financial markets seeking mispriced securities
make the markets increasingly more efficient.
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