Common stockholders have the right to _____.

Select one:

a. convert their stock into a bond

b. receive the cash distributions before preferred stockholders

c. receive cumulative dividends

d. vote for the changes in a firm's charter

e. receive the par value of shares on liquidation

Shareholders exert control of the management of the firm by:

Select one:

a. buying shares in an IPO at a discounted price.

b. running the daily operations of the firm.

c. electing board members who can replace the management.

d. directly replacing management with themselves.

e. buying shares in a second firm at a substantially reduced price.

The P/E ratio gives an indication of _____.

Select one:

a. the payback period of a stock

b. the maturity value of a stock

c. a stock's dividend yield

d. a firm's debt position

e. the par value of a stock

A portfolio is made up of Stocks A, B, C, and D in the proportion of 20%, 30%, 25%, and 25% respectively. The nondiversifiable risks of the stocks as measured by their betas are 0.4, 1.2, 2.5, and 1.75 for Stock A, B, C, and D respectively. The expected returns of the stocks are 12%, 24%, 30%, and 28% respectively. Measure the beta of the portfolio.

Select one:

a. 1.5

b. 1.4

c. 1.8

d. 1.3

e. 1.9