Multiple choice 2023 Business Finance
2023 1 Seven Seas Co has paid a dividend 3 per share out of earnings of
1. Seven-Seas Co. has paid a dividend $3 per share out of earnings of $5 per share. If the book value per share is $40 and the market price is 52.50 per share, calculate the required rate of return on the stock.
a. 12%
b. 11%
c. 5%
d. 6%
2. River Co. has paid a dividend $2 per share out of earnings of $4 per share. If the book value per share is $25 and is currently selling for $40 per share, calculate the required rate of return on the stock.
a. 15.2%
b. 7.2%
c. 14.7%
d. 13.4%
3. Lake Co. has paid a dividend $3 per share out of earnings of $5 per share. If the book value per share is $40, what is the expected growth rate in dividends?
a. 7.5%
b. 8%
c. 12.5%
d. 5%
4. The growth rate in dividends is a function of two ratios. They are:
a. ROA and ROE
b. Dividend yield and growth rate in dividends
c. ROE and the Retention Ratio
d. Book value per share and EPS
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