Book Value

Agency problem means the conflict between ________

1. bond holders and shareholders.

2. managers and suppliers.

3. shareholders and management.

4. controllers and treasurers.

Which of the following is TRUE: _______

1. Effective monthly rate is equal to the effective annual rate divided by twelve.

2. Compounding will not typically lead to differences between quoted and effective rates.

3. The interest rate per period is the APR divided by the number of compounding periods per year.

4. The APR on a loan requiring monthly payments is the annual interest rate you actually pay.

Firestone Co. just paid a dividend of $1.50 per share and its earnings per share is $9.00. Its book value of equity on per share basis is $36. Calculate Firestone’s growth rate:

1. 4.17%

2. 5.25%

3. 20.83%

4. 25%