Business Finance Ch 7

forward PE ratio

A PE ratio that is based on estimated future earnings

comparison of other companies or the company's own history

A benchmark PE ratio can be determined using _____

decreases

All else constant, the dividend yield will increase if the stock price ____________.

cumulative

If unpaid preferred dividends must be "caught up" before any common dividends can be paid, they are called _____ dividends.

a physical location and a face-to-face auction market

The NYSE differs from NASDAQ primarily because NYSE has:

growth rate

The ______ can be interpreted as the capital gains yield.

order flow

The fundamental business of the NYSE is to attract _____

target price

Using a benchmark PE ratio against current earnings yields a forecasted price called a ________

stock has no set maturity, dividends are unknown and uncertain, and the required rate of return is unobservable

What are reasons that valuing stock is more difficult than valuing bonds?

discount rate and dividend

What info is needed in order to determine the value of a stock using a zero growth model?

dividend yield and growth rate

In the dividend discount model, the expected return for investors comes from which two sources?