1. The dividend yield of a stock is much like the current yield of a bond. Both ignore prospective capital gains or losses.
A. TRUE
B. FALSE
2. The dividend discount model states that today's stock price equals the present value of all expected future dividends.
A. TRUE
B. FALSE
3. According to the dividend discount model, a stock's price today depends on the investor's horizon for holding the stock.
A. TRUE
B. FALSE
4. Sustainable growth rates can be estimated by multiplying a firm's ROE by its dividend payout ratio.
A. TRUE
B. FALSE
5. The value of a long position in a forward contract at expiration is
a. the spot price plus the original forward price
b. the spot price minus the original forward price
c. the original forward price discounted to expiration
d. the spot price minus the original forward price discontinue to expiration
e. none of the above
6. sampath holds two put option on coca-cola co at a strike price of $50. he paid $250 for this option. the stock is now trading at $45 per share. what is the total intrinsic value of his put option position?
a- $45
b- $10
c- $1000
d- $500
c- 250