1. _______________is the name of the model that we use to determine the present value of a stock based on its next annual dividend, the annual dividend growth rate, and the applicable annual discount rate.
Earnings capitalization model
Capital pricing model
Zero growth model
Discounted dividend model
Dividend growth model
2. The ___________________________________ is a secondary market.
market where warrants are offered and sold
market in which subordinated shares are issued and resold
market conducted solely by brokers
market dominated by dealers
market where outstanding shares of stock are resold
3. The dividend growth model assumes that _____________________________.
a stock's value is equal to the discounted present value of the future cash flows which it generates
a stock's value changes in direct relation to the required return
stocks that pay the same annual dividend have equal market values
a stock has the same value to every investor
the dividend growth rate is inversely related to a stock's market price
4. You will get a $2,000-gift from your uncle when you graduate from college. Your original plan is to graduate three years from now. The present value of this gift will _________ if you speed up your graduation by one year and graduate two years from now.
increase
become negative
decrease
cannot be determined from the information provided
remain constant