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FIN 501 CHAPTER 4, 5, 6 2026
LATEST QUESTIONS AND
ANSWERS| ACE YOUR GRADES.
Dividend yield is calculated by dividing
A) the market price of one share of stock by the annual dividend
per share.
B) the annual dividend per share by the market price of one share
of stock.
C) earnings per share by market price per share.
D) annual dividend per share by earnings per share. - correct
answer -B
If a corporation declares a 10% stock dividend, then
A) the share price of the stock will most likely decline by about
9%.
B) the share price of the stock will most likely increase by about
10%.
C) the share price of the stock will most likely remain unchanged.
D) each shareholder will get a 10% cash rebate off his or her next
round lot purchase of the stock. - correct answer -A
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Gypsum Corp. pays out 25% of its earnings as dividends.
Earnings per share are currently $1.32, book value per share is
$16.80, and the market price per share is $22.44. What is the
dividend yield?
A) 1.5%
B) 2.0%
C) 5.9%
D) 7.9% - correct answer -A
Pilgrim Corp. stock currently sells for $25 per share? The annual
dividend payment is $1.00 per share and earnings per share are
$3.00. The dividend yield is ________ and the dividend payout
ratio is ________.
A) 12%; .4%
B) 8.33%; 25%
C) 4%; 33%
D) 33%; 4%. - correct answer -C
Pilgrim Corp. stock currently sells for $25. The dividend yield is
4% and the dividend payout ratio is 25%. The dividend is
________ and the earnings per share are ________.
A) $3.00; $1.00
B) $1.00; $4.00
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C) $.12; $1.00
D) $.25; $6.25 - correct answer -B
To take advantage of the opportunity to acquire additional shares
of a company's stock without incurring any brokerage
commissions, many investors participate in
A) initial public offerings.
B) dividend reinvestment plans.
C) deferred equity securities.
D) corporate trusts. - correct answer -B
Reinvested dividends
A) are taxed when the shares purchased with the reinvested
dividend are sold.
B) are taxed at the time the dividend is paid.
C) do not increase the value of an investors holdings.
D) are generally sold at a premium over the market price. -
correct answer -B
Which one of the following is a characteristic of blue chip stocks?
A) guaranteed minimum annual dividend of $2 a share
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B) annual dividends of more than $5 per share
C) long and stable dividend and earnings records
D) relatively high risk exposure - correct answer -C
Investors seeking current income that tends to increase over time
should purchase
A) corporate bonds.
B) income stocks.
C) growth stocks.
D) speculative stocks. - correct answer -B
Companies with strong earnings but limited growth opportunities
A) do not generally pay any dividends.
B) are called blue-chip stocks.
C) generally pay high dividends.
D) are speculative stocks. - correct answer -C
Characteristics of established growth companies include all of the
following EXCEPT
A) high operating margins.
B) steady earnings growth.
FIN 501 CHAPTER 4, 5, 6 2026
LATEST QUESTIONS AND
ANSWERS| ACE YOUR GRADES.
Dividend yield is calculated by dividing
A) the market price of one share of stock by the annual dividend
per share.
B) the annual dividend per share by the market price of one share
of stock.
C) earnings per share by market price per share.
D) annual dividend per share by earnings per share. - correct
answer -B
If a corporation declares a 10% stock dividend, then
A) the share price of the stock will most likely decline by about
9%.
B) the share price of the stock will most likely increase by about
10%.
C) the share price of the stock will most likely remain unchanged.
D) each shareholder will get a 10% cash rebate off his or her next
round lot purchase of the stock. - correct answer -A
, Page | 2
Gypsum Corp. pays out 25% of its earnings as dividends.
Earnings per share are currently $1.32, book value per share is
$16.80, and the market price per share is $22.44. What is the
dividend yield?
A) 1.5%
B) 2.0%
C) 5.9%
D) 7.9% - correct answer -A
Pilgrim Corp. stock currently sells for $25 per share? The annual
dividend payment is $1.00 per share and earnings per share are
$3.00. The dividend yield is ________ and the dividend payout
ratio is ________.
A) 12%; .4%
B) 8.33%; 25%
C) 4%; 33%
D) 33%; 4%. - correct answer -C
Pilgrim Corp. stock currently sells for $25. The dividend yield is
4% and the dividend payout ratio is 25%. The dividend is
________ and the earnings per share are ________.
A) $3.00; $1.00
B) $1.00; $4.00
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C) $.12; $1.00
D) $.25; $6.25 - correct answer -B
To take advantage of the opportunity to acquire additional shares
of a company's stock without incurring any brokerage
commissions, many investors participate in
A) initial public offerings.
B) dividend reinvestment plans.
C) deferred equity securities.
D) corporate trusts. - correct answer -B
Reinvested dividends
A) are taxed when the shares purchased with the reinvested
dividend are sold.
B) are taxed at the time the dividend is paid.
C) do not increase the value of an investors holdings.
D) are generally sold at a premium over the market price. -
correct answer -B
Which one of the following is a characteristic of blue chip stocks?
A) guaranteed minimum annual dividend of $2 a share
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B) annual dividends of more than $5 per share
C) long and stable dividend and earnings records
D) relatively high risk exposure - correct answer -C
Investors seeking current income that tends to increase over time
should purchase
A) corporate bonds.
B) income stocks.
C) growth stocks.
D) speculative stocks. - correct answer -B
Companies with strong earnings but limited growth opportunities
A) do not generally pay any dividends.
B) are called blue-chip stocks.
C) generally pay high dividends.
D) are speculative stocks. - correct answer -C
Characteristics of established growth companies include all of the
following EXCEPT
A) high operating margins.
B) steady earnings growth.
