Question 1 Which of the statements below is TRUE? A) The profits for common stoc

Question

Question 1

Which of the statements below is TRUE?

A) The profits for common stock owners come after payment to the employees, suppliers, government, and creditors.

B) Shareholders elect the board of directors, which ultimately selects the bondholder team that runs the day-to-day operations of the company.

C) The stock is a minor financing source for public companies.

D) Stockholders are paid before debt holders (bondholders) if a company fails.

Question 2

If we believe that a company is following a constant dividend policy, we can then use the current dividend to predict all future dividends because they are the same.

A) TRUE

B) FALSE

Question 3

When looking at the history of returns, we are taking an "ex-ante" review and when we are looking at the future of returns we are taking an "ex-post" view.

A) TRUE

B) FALSE

Question 4

The dividend models appeal to a fundamental concept of asset pricing--that the value of an asset is determined by the future cash flow to which the owner is entitled while holding the asset, and the required rate of return for the cash flow.

A) TRUE

B) FALSE

Question 5

Which of the statements below is TRUE?

A) Investors want to maximize return and maximize risk.

B) Investors want to maximize return and minimize risk.

C) Investors want to minimize return and maximize risk.

D) Investors want to minimize return and minimize risk.

Explanation / Answer

A) The profits for common stock owners come after payment to the employees, suppliers, government, and creditors.

True

False

True

B) Investors want to maximize return and minimize risk.

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