Question

In: Accounting

1)which are correct of these statements . Group of answer choices: a)If a security is underpriced,...

1)which are correct of these statements .

Group of answer choices:

a)If a security is underpriced, then the expected holding period return is above the market capitalization rate.

b)The value of the equity equals the present value of all future payouts (dividends plus repurchases).

c)The value of a share equals the present value of all future dividends per share.

d)If a firm reinvests its earnings at an ROE equal to the market capitalization rate, then its earnings-price (E/P) ratio is equal to the market capitalization rate.

e)The value of a share equals the present value of earnings per share assuming the firm does not grow, plus the NPV of all future investments.

2)which are correct of these statements.

Group of answer choices

a)Everything else equal, the higher the expected dividend growth rate, the higher the P/E ratio.

b)Everything else equal, the higher the plowback ratio, the lower the P/E ratio.

c)Everything else equal, the higher the plowback ratio, the higher the P/E ratio.

d)Everything else equal, the higher the risk of the stock, the lower the P/E ratio.

e)Everything else equal, the higher the risk of the stock, the higher the P/E ratio.

3)Match the stock valuation model from the left column with the cash flows used in that model from the right column.

Group of answer choices

Total Payout Model

   word box: Dividends per share            Free Cash Flow to the Firm            Dividends plus buybacks      

Dividend Discount Model

word box: Dividends per share            Free Cash Flow to the Firm            Dividends plus buybacks      

DCF Model

word box: Dividends per share            Free Cash Flow to the Firm            Dividends plus buybacks      

4)

Match the stock valuation model from the discount rate used in that model from the word bank.

Group of answer choices

Total Payout Model

word box: equity cost of capital            weighted-average cost of capital      

Dividend Discount Model

word box: equity cost of capital            weighted-average cost of capital      

DCF Model

word box: equity cost of capital            weighted-average cost of capital

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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