BUSINESS

10. Investors sell stock at the
A. dealer price.
B. bid price.
C. quoted ask price.
D. broker price.

 

11. These are valued as a special zero-growth case of the constant growth rate model.
A. common stock
B. preferred stock
C. future dividends
D. future stock prices

 

12. Stock valuation model dynamics make clear that lower discount rates lead to
A. lower valuations.
B. higher valuations.
C. lower growth rates.
D. higher growth rates.

 

13. Stock valuation model dynamics make clear that higher growth rates lead to
A. lower valuations.
B. higher valuations.
C. lower growth rates continuing.
D. higher growth rates continuing.

 

14. We can estimate a stock’s value by
A. using the book value of the total stockholder equity section.
B. discounting the future dividends and future stock price appreciation.
C. compounding the past dividends and past stock price appreciation.
D. using the book value of the total assets divided by the number of shares outstanding.

 

15. Many companies grow very fast at first, but slower future growth can be expected. Such companies are called
A. Fortune 500 companies
B. Blue Chip companies
C. Variable Growth Rate firms
D. Constant Growth Rate firms

 

16. We often use the P/E ratio model with the firm’s growth rate to estimate
A. required rates of return.
B. inflation.
C. a stock’s current price.
D. a stock’s future price.

 

17. Value stocks usually have
A. low P/E ratios and high growth rates.
B. high P/E ratios and low growth rates.
C. low P/E ratios and low growth rates.
D. high P/E ratios and high growth rates.

 

18. Dividend yield is defined as
A. the last four quarters of dividend income expressed as a percentage of the par value of the stock.
B. the last four quarters of dividend income expressed as a percentage of the current stock price.
C. the last dividend paid expressed as a percentage of the current stock price.
D. the next dividend to be paid expressed as a percentage of the current stock price.

 

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