financial markets quiz 3 Questions and Answers| Verified
Answers | 100% Guaranteed score
is equal to the total market value of the firm's common stock divided by (the
replacement cost of the firm's assets less liabilities). ** Answ** Tobin Q's
what is book value per share ** Answ** assets minus liabilities divided by number of
shares
Liquidation value per share ** Answ** the amount a shareholder would receive in
the event of bankruptcy
Market value per share ** Answ** market price of the stock
High P/E ratios tend to indicate that a company will _______, ceteris paribus **
Answ** grow quickly
is equal to common shareholders'equity divided by common shares outstanding **
Answ** book value per share
are analysts who use information concerning current and prospective profitability of a
firm to assess the firm's fair market value. ** Answ** fundamental analysts
The _______ is defined as the present value of all cash proceeds to the investor in the
stock ** Answ** intrinsic value
is the amount of money per common share that could be realized by breaking up the
firm, selling the assets, repaying the debt, and distributing the remainder to
shareholders. ** Answ** liquidation per share
Since 1955, Treasury bond yields and earnings yields on stocks have been ** Answ**
positively correlated
Historically, P/E ratios have tended to be ** Answ** lower when inflation has been
high.
The ______ is a common term for the market consensus value of the required return on
a stock. ** Answ** market capitalization rate
The _________ is the fraction of earnings reinvested in the firm. ** Answ** retention
rate or plowback rate
The Gordon model ** Answ** is a generalization of the perpetuity formula to cover
the case of a growing perpetuity and is valid only when g is less than k.
, One of the problems with attempting to forecast stock market values is that ** Answ**
the level of uncertainty surrounding the forecast will always be quite high
The most popular approach to forecasting the overall stock market is to use ** Answ**
aggregate earnings multiplier
In the dividend discount model, which of the following are not incorporated into the
discount rate? ** Answ** Return on assets
A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market
index most likely has ** Answ** a dividend yield which is less than that of the
average firm.
Other things being equal, a low ________ would be most consistent with a relatively
high growth rate of firm earnings. ** Answ** dividend-payout ratio
If a firm has a required rate of return equal to the ROE, ** Answ** the amount of
earnings retained by the firm does not affect market price or the P/E
According to James Tobin, the long-run value of Tobin's Q should move toward **
Answ** 1
whats the goal of fundamental analysts ** Answ** whose intrinsic value exceeds
market price.
The dividend discount model ** Answ** includes capital gains implicitly.
Many stock analysts assume that a mispriced stock will ** Answ** gradually
approach its intrinsic value over several years.
Investors want high plowback ratios ** Answ** whenever ROE > k.
Because the DDM requires multiple estimates, investors should ** Answ** carefully
examine inputs to the model and perform sensitivity analysis on price estimates.
According to Peter Lynch, a rough rule of thumb for security analysis is that ** Answ**
the growth rate should be equal to the P/E ratio.
Dividend discount models and P/E ratios are used by __________ to try to find
mispriced securities. ** Answ** fundamental analysts
Which of the following is the best measure of the floor for a stock price? ** Answ**
liquidation value
Who popularized the dividend discount model, which is sometimes referred to by his
name? ** Answ** Myron Gordon
Answers | 100% Guaranteed score
is equal to the total market value of the firm's common stock divided by (the
replacement cost of the firm's assets less liabilities). ** Answ** Tobin Q's
what is book value per share ** Answ** assets minus liabilities divided by number of
shares
Liquidation value per share ** Answ** the amount a shareholder would receive in
the event of bankruptcy
Market value per share ** Answ** market price of the stock
High P/E ratios tend to indicate that a company will _______, ceteris paribus **
Answ** grow quickly
is equal to common shareholders'equity divided by common shares outstanding **
Answ** book value per share
are analysts who use information concerning current and prospective profitability of a
firm to assess the firm's fair market value. ** Answ** fundamental analysts
The _______ is defined as the present value of all cash proceeds to the investor in the
stock ** Answ** intrinsic value
is the amount of money per common share that could be realized by breaking up the
firm, selling the assets, repaying the debt, and distributing the remainder to
shareholders. ** Answ** liquidation per share
Since 1955, Treasury bond yields and earnings yields on stocks have been ** Answ**
positively correlated
Historically, P/E ratios have tended to be ** Answ** lower when inflation has been
high.
The ______ is a common term for the market consensus value of the required return on
a stock. ** Answ** market capitalization rate
The _________ is the fraction of earnings reinvested in the firm. ** Answ** retention
rate or plowback rate
The Gordon model ** Answ** is a generalization of the perpetuity formula to cover
the case of a growing perpetuity and is valid only when g is less than k.
, One of the problems with attempting to forecast stock market values is that ** Answ**
the level of uncertainty surrounding the forecast will always be quite high
The most popular approach to forecasting the overall stock market is to use ** Answ**
aggregate earnings multiplier
In the dividend discount model, which of the following are not incorporated into the
discount rate? ** Answ** Return on assets
A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market
index most likely has ** Answ** a dividend yield which is less than that of the
average firm.
Other things being equal, a low ________ would be most consistent with a relatively
high growth rate of firm earnings. ** Answ** dividend-payout ratio
If a firm has a required rate of return equal to the ROE, ** Answ** the amount of
earnings retained by the firm does not affect market price or the P/E
According to James Tobin, the long-run value of Tobin's Q should move toward **
Answ** 1
whats the goal of fundamental analysts ** Answ** whose intrinsic value exceeds
market price.
The dividend discount model ** Answ** includes capital gains implicitly.
Many stock analysts assume that a mispriced stock will ** Answ** gradually
approach its intrinsic value over several years.
Investors want high plowback ratios ** Answ** whenever ROE > k.
Because the DDM requires multiple estimates, investors should ** Answ** carefully
examine inputs to the model and perform sensitivity analysis on price estimates.
According to Peter Lynch, a rough rule of thumb for security analysis is that ** Answ**
the growth rate should be equal to the P/E ratio.
Dividend discount models and P/E ratios are used by __________ to try to find
mispriced securities. ** Answ** fundamental analysts
Which of the following is the best measure of the floor for a stock price? ** Answ**
liquidation value
Who popularized the dividend discount model, which is sometimes referred to by his
name? ** Answ** Myron Gordon
