11.
|
The valuation process for a bond does NOT require knowledge of
|
|
Amount of cash flows to be received by investor.
|
|
A Bond's yield curve.
|
|
Maturity date of the loan.
|
|
Investor's required rate of return.
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|
|
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12.
|
Which of the following is directly applied in determining the value of a stock when using the Gordon’s valuation model?
|
|
The firm's capital structure.
|
|
The firm's cash flows.
|
|
The growth rate in earnings.
|
|
The firm's liquidity.
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13.
|
Consider a common stock that paid a $3 dividend per share at the end of the last year and is expected to pay a cash dividend every year at a growth rate of 10 percent. Assume the investor's required rate of return is 12 percent. The value of the stock would be
|
|
$330.00
|
|
$165.00
|
|
$150.00
|
|
$3.30.
|
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|
|
14.
|
A beta of “0” means
|
|
The security is twice as volatile or risky as the market.
|
|
The security is half as volatile as the market.
|
|
The security is independent of the market (risk-free).
|
|
The security is as volatile or risky as the market.
|
|
|
|
15.
|
Price-earnings ratio is NOT affected by
|
|
Growth rate of earnings.
|
|
Size of the firm.
|
|
Cash flow from operations.
|
|
Expected dividends.
|
|
|
|
16.
|
The capitalization of earnings method is based on the _______________ assumption.
|
|
Zero growth case.
|
|
Constant growth case.
|
|
Exponential growth case.
|
|
Modified constant growth case.
|
|
|
|
17.
|
A measure of a security's volatility relative to an average security is
|
|
Coefficient of variation.
|
|
Standard deviation.
|
|
Beta.
|
|
Expected return.
|
|
|
|
18.
|
Forecasted price at the end of year is
|
|
Estimated EPS in year t x estimated P/E ratio
|
|
Estimated EPS in year t x estimated P/S ratio
|
|
Estimated EPS in year t x estimated P/D ratio
|
|
Estimated EPS in year t x estimated P/ ratio
|
|
|
|
19.
|
Assume that required rate of return stay the same but that the future dividends are expected to grow over the long run. As a result of the growth in dividends, the company’s stock price should
|
|
Increase.
|
|
Decrease.
|
|
Stay constant.
|
|
Change, but in no obvious direction.
|
|
|
|
20.
|
The market value of a firm’s outstanding common shares will be higher if
|
|
Investors have a lower required return on equity.
|
|
Investors expect lower dividend growth.
|
|
Investors have longer expected holding periods.
|
|
Investors have shorter expected holding periods.
|
|
|
|
21.
|
By using the dividend growth model, estimate the value of the stock for a firm with a required rate of 20%, an estimated dividend at the end of the first year of $3.00 per share, and an expected growth rate of 10%.
|
|
$20.00
|
|
$15.00
|
|
$30.00
|
|
Cannot be determined.
|
|
|
|
22.
|
The difference between the required rate of return on a given risky investment and that on a riskless investment with the same expected return is the
|
|
Coefficient of variation.
|
|
Market risk premium.
|
|
Standard deviation.
|
|
Beta coefficient.
|
|
|
|
23.
|
______________________ is NOT considered a pragmatic approach to common stock valuation.
|
|
P/E ratios.
|
|
Discounted cash flow analysis.
|
|
Price-sales (P/S) ratios.
|
|
Price-dividend ratios.
|
|
|
|
24.
|
The market portfolio, such as Standard & Poor’s 500, has a beta of ____.
|
|
|
|
25.
|
The ___________________________ method uses the present value technique under which the asking price or value of a real estate investment is the present worth of the future after-tax cash flows from the investment, discounted at the rate of return required by the investor.
|
|
Gross Income Multiplier.
|
|
Discounted cash flow.
|
|
Capitalization rate
|
|
Minimum rate of return.
|
|
|
|
26.
|
_________________ is NOT a rule-of-thumb method to arrive at the estimated value of an income producing property.
|
|
Gross income multiplier.
|
|
Dividend growth.
|
|
Net income multiplier.
|
|
Capitalization rate.
|
|
|
|
27.
|
Certain terms used in real estate investments have applications similar to those used in security analysis. For example, the price earnings (P/E) ratio found in the analysis of stocks is equivalent to _____________ in real estate investment analysis.
|
|
Earnings on sales price.
|
|
Net income multiplier.
|
|
Discounted cash flow.
|
|
Cost recovery.
|
|
|
|
28.
|
Which of the following is equal to before-tax cash flow from operations?
|
|
Net operating income - Debt service.
|
|
Gross operating income - Debt service.
|
|
Gross operating income - Operating expense.
|
|
Net operating income - Income tax.
|
|
|
|
29.
|
Calculate the capitalization rate for the following investment: Net operating income (NOI) = $18,750; Purchase price = $150,000; Equity = 20%
|
|
|
|
30.
|
The capitalization rate is
|
|
Purchase price/net operating income.
|
|
Net operating income/purchase price
|
|
Purchase price/gross rental income..
|
|
Risk-free rate.
|
|
|
|