1. Dixie Mart has 75,000 shares of stock outstanding. The firm expects to earn net income of $268,000 next year with annual increases of 4.5 percent per year thereafter. The firm also expects to pay out 40 percent of its net income in dividends and share repurchases. The required return is 12 percent. What is its share price?
a. $16.16
b. $19.06
c. $26.20
d. $47.64
e. $49.23
2. A stock quote shows a last price of 32.13, a P/E of 17, and a net change of -.23. Based on this information, which one of the following statements is correct?
a. The closing price on the previous trading day was $.23 lower than today's closing price.
b. A dealer can purchase the stock for $.23 less than an investor can.
c. The earnings per share decreased by $.23 a share this year.
d. The earnings per share have increased by 17 percent this year.
e. The earnings per share are equal to 1/17th of $32.13.
3. Jack owns shares of stock in Boynton Foods and wants to be elected to the company's board of directors. There are 10,000 shares of stock outstanding and each share is granted one vote for each open position on the board. Presently, the company is voting to elect two new directors. Jack can be assured of his election:
a. if straight voting applies and he owns at least 25 percent of the shares, plus one additional share.
b. if straight voting applies and he owns at least one-third of the shares, plus one additional share.
c. if cumulative voting applies and he owns 25 percent of the shares, plus one additional share.
d. only if cumulative voting applies and he owns the majority of the shares.
e. if cumulative voting applies and he owns one-third of the shares, plus one additional share.