MBA 6204 Exam Study Guide Questions & Answers 2024/2025
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Course
MBA 6204
Institution
MBA 6204
MBA 6204 Exam Study Guide Questions & Answers 2024/2025
Question 1 - How is preferred stock similar to common stock?
A. Preferred dividend payments usually have unlimited growth potential
B. Investors cannot sue a corporation for non-payment of dividends.
C. Both preferred and common sto...
MBA 6204 Exam Study Guide Questions
& Answers 2024/2025
Question 1 - How is preferred stock similar to common stock?
A. Preferred dividend payments usually have unlimited growth potential
B. Investors cannot sue a corporation for non-payment of dividends.
C. Both preferred and common stockholders have voting control of a firm
D. Preferred stock dividends and common stock dividends are fixed. - ANSWERSB. Investors cannot sue a
corporation for non-payment of dividends.
Ref. Week 3 Video - Intro to Stocks
Question 2 - The primary operating goal of a publicly-owned firm interested in serving its stockholders
should be to
A. Maximize the stock price per share over the long run, which is the stock's intrinsic value.
B. Maximize the firm's expected EPS
C. Minimize the chances of losses.
D. Maximize the firms expected total income.
E. Maximize the stock price on a specific target date. - ANSWERSA. Maximize the stock price per share
over the long run, which is the stock's intrinsic value.
Question 3 - A stock just paid a dividend of D0 = $1.30. The required rate of return is rs = 11%, and the
constant growth rate is g = 5.0%. What is the current stock price?
A. $22.75
B. $23.76
C. $24.11
D. $24.32
, E. $26.50 - ANSWERSA. $22.75
First convert D0 to D1
D1 = D0*(1 + G)^1
= 1.30*(1 + .05)^1
= 1.30*(1.05)^1
D1 = 1.365
Stock price = D1 /(rs - g)
= 1.365 / (.11-.05)
= 1.365 /.06
Stock price = $22.75
Question 4 - Meacham Enterprises' bonds currently sell for $1,110 and have a par value of $1000. They
pay a $85 annual coupon rate and have a 15-year maturity, but they can be called in 5 years at $1075.
What is their yield to call (YTC)
A. 9.88%
B. 8.71%
C. 8.08%
D. 7.84%
E. 7.11% - ANSWERSE. 7.11%
Set up the problem and use your calculator - INPUT
n = 5 years
PV = -$1,110
PMT = $85
FV = 1075
I/YR = (Answer = 7.11%)
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