Exam 3_Questions IPM

Exam 3_Questions IPM - Most-relevant concept questions and...

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Most-relevant concept questions and end-of-chapter problems from the textbook Investments with Excel spreadsheets, by Bodie, Kane, and Marcus, 2009, McGraw-Hill International Edition (ISBN: 007 127828-7) Final exam – Chapters 18, 20, 21, 22 and 23 (drop) 1. What are the limitations of book values? Why it is said they represent a “floor” value for the stock price? 2. How do we compute intrinsic value? How does an investor use it to make the appropriate investment decisions? 3. Describe the constant growth DMM. What are its implications? And possible limitations? 4. How the investment growth opportunities (PVGO) impact the stock price levels? Distinguish between simple and multistage growth models. 5. How do companies use price-earning multiple to valuing a firm? What is the trade-off between P/E rations and stock risk? What are the major pitfalls in P/E analysis? 6. Shortly describe the other comparative valuation ratios and their usefulness in the investment decision analysis. 7. Describe the difference between call and put options. What is the role of the options clearing corporation (OCC)?
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Exam 3_Questions IPM - Most-relevant concept questions and...

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