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15 Cards in this Set
- Front
- Back
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A. Statements i and ii |
1. Which of the following situations depict equilibrium? i. Market Value of a stock equals its Intrinsic Value ii. The Expected Return of a stock equals its Required Return iii. The stock's Growth Rate equals its Required Return iv. The yearly dividends shall be the same indefinitely. A. Statements i and ii B. Statements i, ii and iii C. Statements i and ii D. None of the above |
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C. both market and company-specific |
The change in growth rate is a factor of
A. market or economic conditions B. company-specific or firm C. both market and company-specific D. the stock's Beta |
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B. capital gains yield |
In an equilibrium condition and during a constant growth phase, the stock's growth rate should equal the A. dividend yield B. capital gains yield C. required return D. corrected closing stock price |
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B. a perpetuity |
The process of estimating the intrinsic value of a preferred stock generally shows an example of A. an indefinitely increasing stock B. a perpetuity C. zero-growth stock D. both B and C |
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C. Cost of debt |
The weighted-average cost of capital or (WACC) serves as the equivalent of the cost of equity or required return in the corporate Valuation model. Which of the following is not an element of WACC?
A. Cost of common equity B. Cost of preferred equity C. Cost of debt D. Tax-adjusted cost of debt |
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D. The last period (year) of the non-constant growth phase. |
The terminal value of a non-constant growth stock should bediscounted using which of the following periods? A. The last period (year) of the constant growth phase. B. The first period (year) of the non-constant growth phase C. The midpoint period (year) of the non-constant growth phase. D. The last period (year) of the non-constant growth phase. |
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D. Right to first receive the dividends before all other shareholders receive their share |
Which of the following is not a common stockholder's legal right and privileges? A. Right to elect the corporation's directors B. Subordinate to preferred shareholders in terms of dividend distribution C. Right to be elected as a director of the corporationD. Right to first receive the dividends before all other shareholders receive their share |
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C. the exchange on which the stock is traded |
The considerations associated with stock valuation do not include: A. the expected future dividend performance of the stock B. the estimated selling time and price of the stock C. the exchange on which the stock is traded D. the market return on stocks of that type |
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C. total assets. di pa sure |
The market value of common stock is primarily based on A. the firm's future earnings. B. book value. C. total assets. D. retained earnings. |
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C. greater than |
In the constant-growth model, the market return must be ________thedividend growth rate in order for the formula price to be meaningful.
A. less than B. equal to C. greater than D. proportional to |
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wala pang sagot hehe |
The analysis of estimating a stock's intrinsic value is assumed to be performed by the A. Optimistic Investor B. Perfect Investor C. Pessimistic Investor D. Marginal Investor |
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A. Declining growth di pa sure hehe |
A negative growth rate is also referred to as A. Declining growth B. Upstream growth C. Supernormal growth D. Zero growth |
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C. buy; higher |
Complete the sentence: The marginal investor is an investor who is at the margin and would be willing to if the stock price was slightly lower or to sell if the price was slightly A. sell; lower B. hold; higher C. buy; higher D. buy; lower |
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la pa sagot hehe |
The considerations associated with stock valuation do not include: A. the expected future dividend performance of the stock B. the estimated selling time and price of the stock C. the exchange on which the stock is traded D. the market return on stocks of that type |
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hehehe |
You are considering investing in ABC, Inc.'s stock which is selling at P45.95. Similar stocks return 16%. ABC's last dividend ABC was P4.50 and a 6% constant growth rate is anticipated. Should you purchase ABC, Inc.? A. No, because the stock is overpriced by P1.75 B. No, because the stock is overpriced by P3.85 |
