Question 1

What is the value of the expected dividend per share for a stock that has a required return of 16 percent, a price of $45, and a constant growth rate of 12 percent?

Accepted Answer

A) $1.80 
B) $3.60 
C) $4.50 
D) $7.20 
A) $1.80 
B) $3.60 
C) $4.50 
D) $7.20

Question 2

What is the most likely value of the PRESENT VALUE OF GROWTH OPPORTUNITIES for a stock with current price of $50, expected earnings of $6 per share, and a required return of 20 percent?

Accepted Answer

A) $10 
B) $20 
C) $25 
D) $30 
A) $10 
B) $20 
C) $25 
D) $30

Question 3

Technical analysts would be more likely than other investors to index their portfolios.

Accepted Answer

A) True 
 B)False

Question 4

Technical analysts are most likely to be successful in a market that is considered:

Accepted Answer

A) semi-strong-form efficient. 
B) not to be strong-form efficient. 
C) not to be weak-form efficient. 
D) to follow a random walk. 
A) semi-strong-form efficient. 
B) not to be strong-form efficient. 
C) not to be weak-form efficient. 
D) to follow a random walk.

Question 5

Which of the following is inconsistent with a firm that sells for very near book value?

Accepted Answer

A) low current earning power 
B) no intangible assets 
C) high future earning power 
D) low, unstable dividend payment 
A) low current earning power 
B) no intangible assets 
C) high future earning power 
D) low, unstable dividend payment

Question 6

What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20 percent, and a constant dividend growth rate of 6 percent?

Accepted Answer

A) $19.23 
B) $25.00 
C) $35.71 
D) $37.86 
A) $19.23 
B) $25.00 
C) $35.71 
D) $37.86

Question 7

An excess of market value over the book value of equity can be attributed to going concern value.

Accepted Answer

A) True 
 B)False

Question 8

Reinvesting earnings into a firm will not increase the stock price unless:

Accepted Answer

A) the new paradigm of stock pricing is maintained. 
B) true depreciation is less than reported depreciation. 
C) the firm's dividends are growing also. 
D) the ROE of new investments exceeds the firm's required return. 
A) the new paradigm of stock pricing is maintained. 
B) true depreciation is less than reported depreciation. 
C) the firm's dividends are growing also. 
D) the ROE of new investments exceeds the firm's required return.

Question 9

A stock offers an expected dividend of $3.50, has a required return of 14 percent, and has historically exhibited a growth rate of 6 percent.Its current price is $35.00 and shows no tendency to change.How can you explain this price based on the constant growth dividend discount model?

Accepted Answer

The constant growth dividend discount mo

Question 10

To justify a high P/E ratio, the market must believe one of the following about a firm:

Accepted Answer

A) it has low growth opportunities. 
B) it will have constant dividends forever. 
C) it has high growth opportunities. 
D) it will use low depreciation to increase earnings. 
A) it has low growth opportunities. 
B) it will have constant dividends forever. 
C) it has high growth opportunities. 
D) it will use low depreciation to increase earnings.

What is the value of the expected dividend per share for a stock that has a required return of 16 percent, a price of $45, and a constant growth rate of 12 percent?

What is the most likely value of the PRESENT VALUE OF GROWTH OPPORTUNITIES for a stock with current price of $50, expected earnings of $6 per share, and a required return of 20 percent?

Technical analysts would be more likely than other investors to index their portfolios.

Technical analysts are most likely to be successful in a market that is considered:

Which of the following is inconsistent with a firm that sells for very near book value?

What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20 percent, and a constant dividend growth rate of 6 percent?

An excess of market value over the book value of equity can be attributed to going concern value.

Reinvesting earnings into a firm will not increase the stock price unless:

A stock offers an expected dividend of $3.50, has a required return of 14 percent, and has historically exhibited a growth rate of 6 percent.Its current price is $35.00 and shows no tendency to change.How can you explain this price based on the constant growth dividend discount model?

To justify a high P/E ratio, the market must believe one of the following about a firm:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters

Exam 7: Valuing Stocks

What is the value of the expected dividend per share for a stock that has a required return of 16 percent, a price of $45, and a constant growth rate of 12 percent?

What is the most likely value of the PRESENT VALUE OF GROWTH OPPORTUNITIES for a stock with current price of $50, expected earnings of $6 per share, and a required return of 20 percent?

Technical analysts would be more likely than other investors to index their portfolios.

Technical analysts are most likely to be successful in a market that is considered:

Which of the following is inconsistent with a firm that sells for very near book value?

What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20 percent, and a constant dividend growth rate of 6 percent?

An excess of market value over the book value of equity can be attributed to going concern value.

Reinvesting earnings into a firm will not increase the stock price unless:

A stock offers an expected dividend of $3.50, has a required return of 14 percent, and has historically exhibited a growth rate of 6 percent.Its current price is $35.00 and shows no tendency to change.How can you explain this price based on the constant growth dividend discount model?

To justify a high P/E ratio, the market must believe one of the following about a firm:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters