Ch12,13 HW.docx

# Ch12,13 HW.docx - Cour Investment Analysis se Test Chapters...

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Cour se Investment Analysis Test Chapters 12-13 Homework Question 1 1 out of 1 points A stock has an intrinsic value of \$15 and an actual stock price of \$13.50. You know that this stock ________. Selected Answer: is under valued Answers: has a Tobin's Q value < 1 is under valued has an expected return less than its required return has a beta > 1 Response Feedback: corre ct Question 2 1 out of 1 points A firm cuts its dividend payout ratio. As a result you know that the firm's _______. Selected Answer: earnings retention ratio will increase Answers: return on assets will increase false

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earnings retention ratio will increase earnings growth rate will fall stock price will fall Response Feedback: corre ct Question 3 1 out of 1 points The constant growth dividend discount model (DDM) can be used only when the ___________. Selected Answer: growth rate is less than the required return Answers: growth rate is less than or equal to the required return growth rate is greater than or equal to the required return growth rate is less than the required return growth rate is greater than the required return Response Feedback: corre ct Question 4 1 out of 1 points You wish to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of \$4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant growth DDM, the intrinsic value of stock A _________. Selected Answer: will be higher than the intrinsic value of
stock B Answers: will be higher than the intrinsic value of stock B will be the same as the intrinsic value of stock B will be less than the intrinsic value of stock B more information is necessary to answer this question Response Feedback: corre ct Question 5 1 out of 1 points You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for one year. You expect to receive both \$1.25 in dividends and \$35 from the sale of the share in one year. The maximum price you would pay for a share today is __________ if you wanted to earn a 12% return. Selected Answer: \$32. 37 Answers: \$31. 25 \$32. 37 \$38. 47 \$41. 32

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Response Feedback: Question 6 1 out of 1 points Weyerhaeuser Incorporated has a balance sheet which lists \$70 million in assets, \$45 million in liabilities and \$25 million in common shareholders' equity. It has 1,000,000 common shares outstanding. The replacement cost of its assets is \$85 million. Its share price in the market is \$49. Its book value per share is _________. Selected Answer: \$25. 00 Answers: \$16. 67 \$25. 00 \$37. 50 \$40. 83 Response Feedback: Question 7 1 out of 1 points
Gagliardi Way Corporation has an expected ROE of 15%. If it pays out 30% of it earnings as dividends, its dividend growth rate will be _____.

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