Practice Quiz on Estimating EPS

Practice Quiz on Estimating EPS - 1 For the current year...

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1.For the current year, the expected dividend per share is: A) $0.25 B) $1.00 C) $2.00 D) $3.30 E) $4.00 Answer: B 2.Assume the expected growth rate in dividends is 10%. Then the constant growth model suggests that the required return on Duke stock is: Response: R = [($1.00 x 1.10) / 30.20] + .10 = 13.1% 3.Based on the quote, a good estimate of EPS over the last four quarters is: Response: EPS = $30.20 / 13 = $1.13
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34.On this trading day, the number of Duke shares which changed hands was: 35.Assume that Duke paid a $0.42 annual dividend in the previous period.
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Unformatted text preview: 35. Assume that Duke paid a $0.42 annual dividend in the previous period. What is the dividend growth rate based on this quote? A) 4.3% B) 1.0% C) 2.2% D) 3.2% E) 4.4% Answer: D : Response: g = ($1.00 / 0.42) - 1 = 3.2% 31. You believe that the required return on Duke stock is 11% and that the expected dividend growth rate is 12%, which is expected to remain constant for the foreseeable future. Is the stock currently overvalued, undervalued, or fairly priced? A) Overvalued B) Undervalued C) Fairly priced D) Cannot tell without more information Answer: A Response: P = [$1.00 (1.12) ] / (.11 - .12) = $23.00; overvalued at $30.20 in the market...
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  • Winter '13
  • Tigera
  • Dividend yield, Duke, dividend growth rate

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