Chap018 - Multiple Choice Questions 1. _ is equal to the...

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Multiple Choice Questions 1. ________ 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). A) Book value per share B) Liquidation value per share C) Market value per share D) Tobin's Q E) None of the above. Answer: D Difficulty: Easy 2. High P/E ratios tend to indicate that a company will _______, ceteris paribus. A) grow quickly B) grow at the same speed as the average company C) grow slowly D) not grow E) none of the above Answer: A Difficulty: Easy 3. _________ is equal to (common shareholders' equity/common shares outstanding). A) Book value per share B) Liquidation value per share C) Market value per share D) Tobin's Q E) none of the above Answer: A Difficulty: Easy 4. ________ are analysts who use information concerning current and prospective profitability of a firms to assess the firm's fair market value. A) Credit analysts B) Fundamental analysts C) Systems analysts D) Technical analysts E) Specialists Answer: B Difficulty: Easy 5. The _______ is defined as the present value of all cash proceeds to the investor in the stock. A) dividend payout ratio B) intrinsic value C) market capitalization rate D) plowback ratio E) none of the above Answer: B Difficulty: Easy 6. _______ 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. A) Book value per share B) Liquidation value per share C) Market value per share D) Tobin's Q E) None of the above Answer: B Difficulty: Easy 7. Since 1955, Treasury bond yields and earnings yields on stocks were_______. A) identical B) negatively correlated C) positively correlated D) uncorrelated Answer: C Difficulty: Easy 8. Historically, P/E ratios have tended to be _________. A) higher when inflation has been high B) lower when inflation has been high
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C) uncorrelated with inflation rates but correlated with other macroeconomic variables D) uncorrelated with any macroeconomic variables including inflation rates E) none of the above Answer: B Difficulty: Easy 9. The ______ is a common term for the market consensus value of the required return on a stock. A) dividend payout ratio B) intrinsic value C) market capitalization rate D) plowback rate E) none of the above Answer: C Difficulty: Easy 10. The _________ is the fraction of earnings reinvested in the firm. A) dividend payout ratio B) retention rate C) plowback ratio D) A and C E) B and C Answer: E Difficulty: Easy 11. The Gordon model A) is a generalization of the perpetuity formula to cover the case of a growing perpetuity. B) is valid only when g is less than k . C) is valid only when k is less than g . D)
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This note was uploaded on 04/03/2011 for the course FIN 202 taught by Professor Sam during the Spring '11 term at University of Texas at Dallas, Richardson.

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Chap018 - Multiple Choice Questions 1. _ is equal to the...

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