Chapter 8-Stocks
present
An assets value is determined by the ____ value of its future cash flows
rate of return is not easily observed, common stock cash flows are not known in advance, life of common stock is essentially forever.
It is difficult to value common stock because
the company's own historical PE's
A benchmark PE ratio can be determined using the PE's of similar companies and
forward
A PE ratio that is based on estimated future earnings is known as a _____ PE ratio
zero growth
A ____ _____ model for stock valuation is distinguished by a constant dividend amount
cash flows
Dividends & Capital gains are ____ ____ flows to investors
primary
IPO's occur in the _____ market
zero
If the growth rate is zero, the capital gains yield is ____
Dividend yield and growth rate
In the discount model, the expected return for investors comes from which 2 sources?
payment of dividends and distribution of corporate assets
Preferred stock has preference in common stock in
constant growth model
The ____ _____ _____ infers that dividends change at a constant rate
dividend yield
The ____ _____ is determined by dividing the expected dividend by the current price
NASDQAQ and NYSE
The most important markets in the US are
expected
The price of a share of common stock is equal to the present value of all _____ future dividends.
secondary market
The trading of existing shares exist in the _____ ______
discount
The value of a firm is a function of it's growth rate and ___ rate.
NASDAQ
This network has a multiple market system and computer network and securities. Also no trading floor
Annual dividend amount, discount rate, and special case patterns of dividend growth
What do we need to determine the value of stock using the zero growth model?