Quiz_6_Answers

Quiz_6_Answers - Quiz 6 Group 1 1. Which of the following...

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Quiz 6   Group 1 1. Which of the following is true regarding stock valuation? A. Interest rates and stock values have a  direct relationship. B. Both profits and interest rates vary  indirectly with stock value. C. Profits and stock values have a direct  relationship. D. The value of a stock depends ONLY on the  required yield that investors’ expect. E. The value of a stock depends ONLY on the  firm’s future profits. Answer:  C 2. Which of the following is true regarding stock valuation? A. Profits and stock values have an indirect  relationship B. The value of a stock depends ONLY on the required yield that investors’ expect C. The value of a stock depends ONLY on the firm’s future profits D. Both profits and interest rates vary indirectly with stock value. E. Interest rates and stock values have an inverse relationship. Answer:  E   Group 2 3. Which statement is true?
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A. Growth stocks should pay a more  predictable return than income stocks. B. Growth stocks are stocks with the highest dividend payout ratios. C. The expected future value of a stock is not affected by dividend policy. D. The current value of a stock should not be affected by dividend policy. E. Lower dividend yields make a stock's current price lower. Answer:  D   Group 3 4. Fundamental stock analysis _______________. A. cannot be used to value stocks. B. includes no intrinsic value for a  company’s stock C. believes that a company’s  operating and financial  performance determine the value  of the company’s stock. D. focuses on the influence of  investor psychology. E. does not include DCF valuation,  target stock price, or relative  valuation. Answer:  C 5 Which of the following is true about fundamental analysis? A. Its cornerstone is the efficient  market hypothesis B. It involves charting historic stock  price movements and trading  volumes C. It involves evaluating overall  economic, industry, and 
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company data to estimate a  stock’s value. D. It is influenced by psychology  and emotions of the crowd E. It tells investors not to bother  searching for undervalued stocks  but to pick a risk level that they  can live with and diversify their  holdings. Answer:  C   Group 4 6. Which of the following is an example of technical analysis? A. Comparing the P/E of the  stock to that of the  market. B. Projecting future cash  flows. C. Projecting future earnings  per share. D.
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Quiz_6_Answers - Quiz 6 Group 1 1. Which of the following...

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