Cost of Equity An organization’s cost of equity can be calculated in a variety of ways. Complete the following tasks: Locate ten organizations that currently pay a common stock cash dividend. Go to the Finance Web link provided in the Webliography, enter the ticker symbol of an S&P 500 company in the quote box, and see whether it indicates that the company pays a dividend. Calculate the organizations’ cost of equity using the dividend yield plus growth rate approach and the security market line (SML) model approach. For each organization, show how the cost of equity differs based on the two approaches. Refer to the Web link Finance in the Webliography for information on beta of stocks. Submit your answers in a 2- to 3-page Microsoft Word document and your calculations in a Microsoft Excel sheet. link: http://finance.yahoo.com
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A) Our money supply is fixed by law and can be raised by only a very small percentage each year. B) Our money supply is backed by gold. C) Credit cards are a form of money. D) Money makes an excellent store of value during times of inflation. E) One of the basic jobs of money is a standard of value. 15. The first bankers were A) goldsmiths. B) printers. C) storekeepers. D) innkeepers. E) blacksmiths. 16. Suppose you had no money in your checking account and your bank granted you overdraft privileges. You then went out and charged $20 on your debit card. How much would your bank charge you in fees for using your overdraft privileges? A) 0 B) $5 C) 15 D) 35 E) $50 17. Statement I: John Maynard Keynes called the hoarding of money at very low interest rates a "liquidity trap." Statement II: Since the late 1990s, Japan has been caught in a liquidity trap. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. 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Our educational standards today. A) are the highest in history. B) are much higher than they were 50 years ago. C) are the same as they were 50 years ago. D) are much lower than they were 50 years ago. 23. Brazil should be classified as a(n) A) very poor LDC. B) middle-rank LDC. C) NIC. D) industrial country. 24. The most important reason for our slow rate of productivity growth over the last three decades (of those listed below) is A) lagging business sales. B) foreign imports. C) our low savings rate. D) high tax rates. 25. Structural unemployment occurs when A) workers have quit one job and are looking for a better one. B) high school graduates enter the labor market every June. C) the business cycle is in a downturn and people are laid off. D) the people without jobs have skills that don't match the available job openings. 26. Unemployment caused by economic decline or recession is called A) frictional unemployment. B) cyclical unemployment. C) natural unemployment. D) necessary unemployment. E) structural unemployment.. 27. The recession of 2001 was caused by A) the events of 9/11. B) a decline in consumer spending. C) a decline in investment spending. D) the war in Iraq. 28. A budget deficit is the A) annual excess of government spending over revenue raised by taxes, fees, and charges. B) shortfall of Social Security collections toward payment of benefits. C) amount by which tax revenues and borrowed funds fall short of government expenditures. D) excess of tax revenues over expenditures. E) amount by which tax revenues exceed borrowed funds. 29. The consumer price index is created by A) calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year. B) the Congressional Budget Office. C) averaging the price increases for all consumer goods in the GDP and adding 100. D) dividing nominal dollar consumer expenditures by base year consumer expenditures. 30. Statement I: When equilibrium GDP and full employment GDP are equal, there is no inflationary gap and no deflationary gap.Statement II: Equilibrium GDP is an ideal goal that can never be attained. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 31. When government expenditures in a given year are less than tax receipts, there exists A) a budget deficit. B) public revenue. C) full-employment taxation. D) a budget surplus .32. As price rises, the quantity ______________ rises. A) demanded B) supplied C) demanded and supplied 33. If the MPC were .75, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to fall by 100? A) A decrease of 25. B) A decrease of 50. C) A decrease of 75. D) A decrease of 100. E) A decrease of 125. (I will send the image) 34. When price is $8 A) quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium price. B) quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium price. C) quantity supplied is greater than quantity demanded and, therefore, price must fall to get to equilibrium price. D) quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium price. 35. Usury is considered the charging of A) higher interest rates than people are willing to pay. B) lower interest rates than people are willing to pay C) unconscionably high interest rates. D) extremely low rates of interest. 36. The present value of a dollar rises as A) the interest rate declines and the number of years you wait for your money declines. B) the interest rate rises and the number of years you wait for your money rises. C) the interest rate declines and the number of years you wait for your money rises. D) the interest rate rises and the number of years you wait for your money declines. 37. In economics we say the amount of land is A) fixed. B) variable. C) both fixed and variable. D) neither fixed nor variable. 38. Which is not determined by supply and demand? A) The wage rate B) The interest rate C) Rent D) Profits 39. Which of the following is false? A) The supply of land is fixed. B) When the demand for a plot of land rises, its supply will rise. C) Land is most efficiently used in cities. D) The rent on a particular piece of land is based on the MRP schedule of the highest bidder. 40. If you knew that interest rates would be rising, then you would predict that the present value of $1 received 5 years from now A) would be higher. B) would be about the same. C) would be lower. D) could be higher or lower. 41. Changes in rent on a plot of land are chiefly due to A) changes in demand. B) changes in supply. C) changes in both demand and supply. D) changes in neither supply nor demand. (I will send the image) 42. The horizontal dotted line is A) a price ceiling. B) a price floor. C) either a price ceiling or a price floor. D) neither a price ceiling nor a price floor. 43. These lenders avoid using the term "interest," but their borrowers still do pay a charge for borrowing money. This would be considered ___________ lending. A) Islamic B) payday C) fringe D) sub-prime 44. __________ sees the entrepreneur as an exploiter of labor. A) Joseph Schumpeter B) Frank Knight C) Henry George D) Karl Marx 45. A more equal distribution of income A) might hurt the incentive to work .B) would not hurt the incentive to work C) would be opposed by nearly all Americans D) would hurt the poor. 46. Between 1994 and 2005 our welfare rolls A) declined substantially every year. B) declined slightly every year .C) declined most years. D) stayed about the same. E) rose most years 47.Who expressed this view? "Unlike the present period, (black) inner-city communities prior to 1960 exhibited the features of social organization—including a sense of community, positive neighborhood identification, and explicit norms and sanctions against aberrant behavior." A) Charles Murray B) William Julius Wilson C) Mickey Kaus D) Lisabeth Schorr E) Celia Dugger 48. According to Darity and Myers A) black men are becoming increasingly marginal to our economy B) the basic cause of poverty is welfare dependency C) the best solution to poverty is the negative income tax D) as our economy continues to expand, black poverty will decline (I will send the image) 49. The percentage share of income of the bottom quintile on curve X is A) 0. B) 5. C) 10. D) 15. E) 20. 50. The percentage of people living in poverty in 2006 in the U.S. was _______. A) 6 B) 11.7 C) 12.3 D) 15.2 51. Child poverty is A) much more of a problem in France, Germany, and Japan than it is in the U.S. B) less of a problem in the United States than in Canada, Britain, or Italy. C) more of a problem in Sweden, Denmark, and Ireland than it is in the U.S. D) much more of a problem in the U.S. than in virtually all other industrialized countries. 52. Statement I: Social Security payments help mostly the poor. Statement II: Poverty may be defined as a relative concept and as an absolute concept. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 53. Compared to their levels in 1999, the poverty line has ______ and the minimum hourly wage has ________. A) gone up; gone up B) stayed the same; stayed the same C) gone up; stayed the same D) stayed the same; gone up 54. In which year was the poverty rate the lowest? A) 1960 B) 1973 C) 1984 D) 1993 E) 2006 55. Which statement is true? A) Most economists support rent control laws. B) Usury laws and rent control are price ceilings. C) Usury laws have never had any effect because they are set well above interest rates. D) None of the choices. (I will send the image) 56. If price were set by the government at $3, there would be a price _____________, that would cause a ___________ of _______ units. A) floor, surplus, 12 B) floor, shortage, 12 C) ceiling, surplus, 14 D) ceiling, shortage, 14 57. Sue Ann Buchanan, can make $800,000 on the pro tennis tour, but would be willing to do it for $200,000. Her economic rent is A) $200,000. B) $600,000. C) $800,000. D) $1,000,000. 58. Despite their fantastic employment gains, African American men earn ____% of what white men earn. A) 65 B) 55 C) 60 D) 76 59. Since 1996, productivity growth has ________ and real wages have ______. A) risen; risen B) fallen; fallen C) risen; fallen D) fallen; risen. 60. Which statement is false? 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