Chapter 8

11) Which of the following might cause a firm's P/E ratio to fall? I. Earnings increases in line with past expectations. II. The industry faces increased competition. III. Inflation and interest rates rise. IV. The overall market multiple rises. A) I, II and III only B) I, II and IV only C) I, III and IV only D) I, II, III and IV

A

13) High P/E ratios can be expected when investors expect A) a high rate of growth in earnings. B) low earnings. relative to market prices. C) high interest rates. D) a bear market.

A

15) The dividends-and-earnings (D&E) approach to stock valuation and the variable-growth DVM approach are similar in that both approaches A) are present-value based. B) consider dividends only and ignore the future selling price of the stock. C) consider the future selling price of the stock but ignore future dividends. D) use the historical dividend growth rate as the key input figure.

A

23) When using the constant-growth dividend valuation model, which of the following will lower the value of the stock? A) An increase in the required rate of return. B) A decrease in the required rate of return. C) An increase in the dividend payout ratio. D) An increase in the growth rate of the dividends.

A

26) ABC Company stock currently has a market value equivalent to its intrinsic value. Marco perceives that ABC Company is increasing its level of risk and therefore Marco increases his required rate of return on ABC stock. This change in the required rate of return A) will reduce the intrinsic value of ABC stock to Marco. B) will increase the intrinsic value of ABC stock to Marco. C) will change the intrinsic value but the direction of the change cannot be determined. D) is a signal to Marco that he should buy more ABC Company stock.

A

27) In applying the variable-growth dividend valuation model to a company's stock, analysts frequently define the growth rate, g, as equal to A) ROE multiplied by the firm's retention rate. B) ROE divided by the dividend payout ratio. C) the dividend payout ratio multiplied by the firm's retention rate. D) P/E multiplied by the dividend payout ratio.

A

31) In general, the higher the retention ratio A) the higher the future growth rate of the company. B) the higher the dividends per share of common stock. C) the higher the future debt-equity ratio. D) the lower the future book value per share.

A

32) Martin's Inc. is expected to pay annual dividends of $2.50 a share for the next three years. After that, dividends are expected to increase by 3% annually. What is the current value of this stock to you if you require a 9% rate of return on this investment? A) $39.47 B) $40.11 C) $41.81 D) $42.92

A

7) P/E ratios could rise even as earnings fall if A) earnings fall at a faster rate than stock prices. B) earnings fall at a slower rate than stock prices. C) investors expect lower stock prices to be permanent. D) investors expect lower earnings to be permanent.

A

7) The price-to-cash-flow method of stock valuation generally A) uses either EBITDA or operating cash flow from the cash flow statement as a measure of cash flow. B) relies on historical cash flows. C) produces a cash flow multiple that is greater than the P/E multiple. D) applies the P/E multiple to the cash flow per share value.

A

8) The intrinsic value of a stock provides a purchase price for the stock A) that is reasonable given the associated level of risk. B) which will assuredly yield the anticipated capital gain. C) which will guarantee the expected rate of return. D) that is always below the market value but yet yields the expected rate of return.

A

9) Commonly used multiples for determining a stock's value include I. price to earnings. II. price to sales. III. price to cash flow. IV. price to dividends. A) I, II and III only B) I, III and IV only C) II, III and IV only D) I, II III and IV

A

9) For which one of the following situations will the dividend-growth models work especially well? A) mature firm with a policy of increasing its earnings and dividends at an average rate of 5% per year. B) a company with highly variable earnings and a policy of maintaining a constant 50% payout ratio C) a company that intends to pay out all of its earnings as dividends. D) a company that is widely viewed as an attractive takeover target.

A

9) The value of a stock is a function of A) future returns. B) historic dividend growth rate. C) most recent earnings per share. D) past returns.

A

B

An investor should purchase a stock when A) the market price exceeds the intrinsic value. B) the expected rate of return equals or exceeds the required return. C) the capital gains rate is less than the required return and no dividends are paid. D) the market price is greater than the justified price.

11) Zephyr Inc. sells wind based systems for generating electricity. The company pays no dividends, but you estimate the stock will be worth $50 per share 5 years from now and you require a 15% rate of return for stock investments of this type. What price should you be willing to pay for this stock? A) $12.50 B) $24.86 C) $43.48 D) $57.50

B

12) Ivonne has bought shares of RIO, Inc. stock for $25.00 per share. She expects a 1.00 dividend at the end of this year. After 2 years, she expects to receive a dividend of $1.25 and to sell the stock for $28.75. What is Ivonne's required rate of return? A) 4.0% B) 11.6% C) 15.2% D) 24.0%

B

12) Which of the following contributes to high P/E ratios? A) high dividend payout ratios B) high rate of earnings growth C) periods of high inflation D) high debt ratios

B

13) Lindor Inc.'s $100 par value preferred stock pays a dividend fixed at 8% of par. To earn 12% on an investment in this stock, you need to purchase the shares at a per share price of A) $9.60. B) $66.67. C) $96.00. D) $150.00.

B

14) An investor should purchase a stock when A) the market price exceeds the intrinsic value. B) the expected rate of return equals or exceeds the required return. C) the capital gains rate is less than the required return and no dividends are paid. D) the market price is greater than the justified price.

B

14) In the price/earnings approach to stock valuation, A) historical stock prices are utilized. B) forecasted EPS are typically used. C) the P/E ratio is computed by multiplying the stock price by the earnings per share. D) the market P/E ratio, adjusted by beta, is used to value individual stocks.

B

14) Which one of the following is a correct equation to calculate earnings per share? A) (ROA)(book value per share) B) (profit margin)(total asset turnover)(equity multiplier)(book value per share) C) (profit margin)(equity multiplier)(book value per share) D) (profit margin)(book value per share)

B

16) Global Warning's EPS for the current year is $2.75 and its current P/E ratio is 50. You have forecasted that EPS will grow by 10% but the P/E ratio will fall to 40. What do you expect the price of a share of GW's stock to be at the end of next year? A) $110 B) $121 C) $137.50 D) $151.25

B

18) Early in 2013, Mathew is analyzing shares of Janeff Corp. He expects the following dividends per share (end of year). 2013 $1.00 2014 $1.25 2015 $1.50 He expects 2015 earnings per share to be $4.50 and Janeff's P/E ratio to be 20. His required rate of return for this stock is 12%. He should pay no more than A) $43.75 per share. B) $67.02 per share. C) $68.75 per share. D) $93.75 per share.

B

20) The common stock of Jennifer's Furniture Outlet is currently selling at $32.60 a share. The company adheres to a 60% dividend payout ratio and has a P/E ratio of 19. There are 21,000 shares of stock outstanding. What is the amount of the annual net income for the firm? A) $21,619 B) $36,032 C) $48,327 D) $60,053

B

21) According to the price/earnings approach to stock valuation, if the dividend growth rate is expected to drop or if the required return goes up, the net effect is a A) higher P/E ratio. B) lower P/E ratio. C) higher stock price. D) higher retention rate.

B

30) The variable-growth dividend valuation model A) develops the value of a stock using the future value of dividends minus a rate of capital gain growth. B) is valuable because it accounts for the general growth patterns of most companies. C) is invalid if at any point in time the growth rate exceeds the required rate of return. D) assumes the rate of dividend growth will vary indefinitely.

B

33) MBA Inc. will pay a dividend for the first time at the end of 2013. It projects the following dividend per share: 2013 $1.50 2014 $2.00 2015 $2.50 Beginning with 2016 dividends will grow at 4% per year. The required rate of return is 12%. The intrinsic value of MBA shares is A) $25.37. B) $27.85. C) $28.96. D) $38.50.

B

8) Most analysts would not feel comfortable forecasting a firm's future earnings for more than A) the next quarter. B) 1 to 3 years. C) 4 or 5 years. D) the next business cycle.

B

9) The risk-free rate of return is 2.2 percent, the expected market return is 11 percent, and the beta for Solstice, Inc. is 1.12. What is Solstice's required rate of return? A) 8.80% B) 12.05% C) 13.20% D) 14.30%

B

10) EBITDA is an acronym for A) Earnings Based Information, Total Development Approach. B) Ernst, Bostwick, Davenport, Innes Approach. C) Earnings Before Interest, Taxes, Depreciation, and Amortization. D) Earnings Before Interest, Taxes, Dividends, and Asset replacement.

C

10) The risk free rate is 2%. The expected rate of return on the market is 12%. Beta and the expected rate of return for four stocks are as follows.: ABC .8 , 10%; DEF 1, 12%; GHI 1.2 , 13%, and JKL 2, 22%. Which of these stocks should not be purchased? A) ABC B) DEF C) GHI D) JKL

C

10) The single most important variable in the dividends-and-earnings approach is the A) rate of growth. B) applicable beta. C) appropriate P/E multiple. D) amount of the future dividends.

C

11) Which of the following are key inputs to determining the value of an asset? I. the required rate of return II. future cash flows III. current stock price IV. timing of future cash flows A) I and II only B) I and III only C) I, II and IV only D) II, III and IV only

C

13) GLOO stock's P/E ratio is 45 at a time when the market's P/E ratio is 15. GLOO's relative P/E ratio is A) 30. B) -30. C) 3. D) .33.

C

15) Which one of the following is is most likely to increase the price of a stock? A) rapid growth in sales. B) rapid growth in dividends. C) rapid growth in earnings. D) rapid increases in bond interest rates.

C

16) John requires a 12% rate of return on EG stock at a time when investors, on average, are requiring an 11% rate of return on the same stock. Which of the following will happen? A) John will have to pay more for the stock than he was willing to pay. B) Investors with different required rates of return will pay different prices for the stock. C) John will not be able to buy the stock unless the price changes. D) John will buy the stock at a lower price.

C

16) The Mayan Calendar Co. intends to liquidate all of its assets at the end of 2012 and pay out the proceeds as one giant dividend of $1,000 per share. For an investor who required a 10% rate of return, the value of Mayan stock on January 1 2012 would have been A) $1,100. B) $1,000. C) $909.09. D) Such a stock would have no value at all.

C

17) A company that wants to maintain both a constant growth rate in dividends and a constant payout ratio will have to A) grow earnings faster than dividends. B) increase assets at the same rate as dividends. C) grow earnings at the same rate as dividends. D) increase stockholders' equity at the same rate as dividends.

C

17) Early in 2013, Maria bought shares of MBA Inc. at $27.85 per share. She received the following dividends per share (end of year). 2013 $1.50 2014 $2.00 2015 $2.50 Immediately after receiving the the 2015 dividend, she sold the stock for $32.50 per share. Her internal rate of return on this investment was A) 9.17%. B) 10.25%. C) 11.99%. D) 13.85%.

C

18) Michelak's Maritime Industries has relatively stable earnings and pays an annual dividend of $2.50 per share. This dividend has remained constant over the past few years and is expected to remain constant for some time to come. If you want to earn 12% on an investment in the common stock of Michelak's, how much should you pay to purchase each share of stock? A) $12.50 B) $18.88 C) $20.83 D) $25.00

C

18) Which of the following will lead to an increase in earnings per share? A) an increase in the P/E ratio. B) an increase in the dividend payout ratio. C) an increase in return on equity if book value per share stays the same. D) a decrease in the number of shares if return on equity stays the same.

C

19) Markhem Enterprises is expected to earn $1.34 per share this year. The company has a dividend payout ratio of 40% and a P/E ratio of 18. What should one share of common stock in Markhem Enterprises be selling for in the market? A) $9.65 B) $14.47 C) $24.12 D) $33.77

C

19) Which of the following approaches to stock valuation is NOT based on a multiple of some figure from the financial statements? A) the price to cash flow approach B) the price to sales approach C) the dividends-and-earnings approach D) the price to earnings approach

C

20) The Highlight Company has a book value of $56.50 per share, and is currently trading at a price of $59.00 per share. You are interested in investing in Highlight, and have just used a present-value based stock valuation model to calculate a present (intrinsic) value of $55.00 per share for Highlight's stock. Assuming that your calculations are correct you should A) buy the stock, because the current market price per share is higher than the present value. B) buy the stock, because the book value per share is greater than the present value. C) not buy the stock, because the present value is less than the market price per share. D) buy the stock, because the book value and the current trading price are very close to one another in value.

C

21) What is the required rate of return on a common stock that is expected to pay a $0.75 annual dividend next year if dividends are expected to grow at 2 percent annually and the current stock price is $8.59? A) 8.73% B) 8.91% C) 10.73% D) 11.38%

C

22) The constant-growth dividend valuation model is best suited for use with A) stocks of new or emerging companies. B) small-cap stocks within growing industries. C) the stocks of mature, dividend-paying companies. D) the stocks of cyclical companies.

C

24) Newton, Inc. just paid an annual dividend of $0.95. Their dividends are expected to increase by 4% annually. Newton Company stock is selling for $11.54 a share. What is the required rate of return on this stock implied by the dividend-growth model? A) 8.23% B) 12.2% C) 12.6% D) 13.9%

C

29) Which of the following statements concerning the constant-growth dividend valuation model is (are) correct? I. One simple method of estimating the dividend growth rate is to analyze the historical pattern of dividends. II. The expected total return equals the return from capital gains plus the return from dividends paid. III. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return payoffs differ. A) I and IV only B) II and III only C) I, II and IV only D) I, II and III only

C

34) DMC3 Inc. will pay no dividend for 2013 or 2014. At the end of 2015, it will pay a dividend of $2.50. Thereafter dividends will grow at 4% per year. The required rate of return is 12%. The intrinsic value of DMC3 shares is A) $32.50. B) $35.00. C) $24.91. D) $0.00.

C

7) The single most important issue in the stock valuation process is a company's A) past earnings record. B) historic dividend growth rate. C) expected future returns. D) capital structure.

C

8) Even if a company does not officially follow a fixed-dividend policy, dividend payments are A) extremely difficult to predict. B) very volatile and subject to economic conditions. C) fairly stable from one time period to another. D) directly tied to a company's P/E ratio.

C

8) For which one of the following situations will the price to sales valuation model work but the dividend and cash flow models will not? A) mature firm with minimal growth opportunities B) water-powered electric utility company C) newly-formed biotechnology company with negative earnings D) top-performing firm in a mature industry

C

8) Which of the following statements concerning the dividends-and-earnings (D&E) approach to stock valuation are true? I. The D&E valuation method works just as well for non-dividend paying stocks as it does for dividend-paying stocks. II. The current value of a stock using the D&E method is equal to the expected selling price of the stock plus the present value of the future dividends. III. The D&E approach considers earnings per share and the price/earnings ratio. IV. The D&E considers a finite investment period. A) I and II only B) III and IV only C) I, III and IV only D) I, II and III only

C

10) Which of the following variables affect the P/E ratio? I. capital structure of a firm II. amount of dividends paid III. inflation rate IV. earnings rate of growth A) I, II and III only B) I, II and IV only C) I, III and IV only D) I, II, III and IV

D

11) A firm with a price to sales ratio of 1 would usually be considered A) overvalued. B) correctly valued. C) near bankruptcy. D) undervalued.

D

12) In the Capital Asset Pricing Model, which of the following factors are used to determine the required rate of return? I. the risk-free interest rate II. future cash flows III. expected return on the market portfolio IV. beta A) I and II only B) I, II and III only C) II, III and IV only D) I, III and IV only

D

12) The major forces behind earnings per share are A) return on assets and total asset value. B) gross revenue and the stock price. C) growth and the number of shares outstanding. D) net income and the number of shares outstanding.

D

12) The subjective approach to determining a required rate of return for a stock includes I. the rate of return on a long-term bond. II. a risk premium for the perceived business risk of the asset. III. a risk premium for assuming the risk of the market. IV. the desired rate of return of the individual investor. A) I and III only B) II and IV only C) I, II and IV only D) I, II and III only

D

13) An internal rate of return (IRR) is the discount rate that A) represents the minimal rate required to create a positive net present value. B) is the minimal rate of return an investor will accept. C) provides an investor with their required return. D) produces a present value of future benefits equal to the market price of a stock.

D

14) The required rate of return necessary for the dividend valuation model can be estimated using A) the Capital Asset Pricing Model. B) comparisons to the rates of return on stocks of similar risk. C) a subjective assessment of the return required over and above less risky investments such as government bonds. D) any or all of the above.

D

14) Which of the following will most directly influence a company's market value? A) the state of the economy B) the book value of its assets C) the use of financial leverage D) its future cash flows

D

15) James is willing to settle for a 10% rate of return on EG stock at a time when investors, on average, are requiring an 11% rate of return on the same stock. Which of the following will happen? A) James will be have to pay more for the stock than he was willing to pay. B) Investors with different required rates of return will pay different prices for the stock. C) James will not be able to buy the stock unless the price changes. D) James will be happy to buy the stock for less than he was willing to pay.

D

17) Over the last year, a firm's earnings per share increased from $1.20 to $1.40, its dividends per share increased from $0.50 to $0.60, and its share price increased from $21 to $24. The firm maintained a relative P/E of 1.10 over the entire time period. Given this information, it follows that the A) stock experienced an increase in its P/E ratio. B) company had a decrease in its dividend payout ratio. C) current P/E of the overall market is 26.4. D) overall market P/E is declining.

D

19) Winifred, Inc. paid $1.64 as an annual dividend per share last year. The company is expected to increase their annual dividends by 3% each year. How much should you pay to purchase one share of this stock if you require a 9% rate of return on this investment? A) $18.22 B) $18.77 C) $27.33 D) $28.15

D

20) One stock valuation model holds that the value of a share of stock is a function of its future dividends, and that the dividends will increase at an annual rate which will remain unchanged over time. This stock valuation model is known as the A) approximate yield model. B) holding period return model. C) dividend reinvestment model. D) constant growth dividend valuation model.

D

25) The Frisco Company just paid $2.20 as its annual dividend. The dividends have been increasing at a rate of 4% annually and this trend is expected to continue. The stock is currently selling for $63.60 a share. What is the rate of return on this stock? A) 3.46% B) 3.60% C) 7.46% D) 7.60%

D

28) A company has an annual dividend growth rate of 5% and a retention rate of 40%. The company's dividend payout ratio is A) 35%. B) 40%. C) 45%. D) 60%.

D

6) The Merry Co. has current annual sales of $350,000 and a net profit margin of 6%. Sales are expected to increase by 5% annually while the profit margin is expected to remain constant. What is the projected after-tax earnings for two years from now? A) $19,294 B) $22,050 C) $23,100 D) $23,153

D

C

Even if a company does not officially follow a fixed-dividend policy, dividend payments are A) extremely difficult to predict. B) very volatile and subject to economic conditions. C) fairly stable from one time period to another. D) directly tied to a company's P/E ratio.

C

GLOO stock's P/E ratio is 45 at a time when the market's P/E ratio is 15. GLOO's relative P/E ratio is A) 30. B) -30. C) 3. D) .33.

B

Global Warning's EPS for the current year is $2.75 and its current P/E ratio is 50. You have forecasted that EPS will grow by 10% but the P/E ratio will fall to 40. What do you expect the price of a share of GW's stock to be at the end of next year? A) $110 B) $121 C) $137.50 D) $151.25

A

High P/E ratios can be expected when investors expect A) a high rate of growth in earnings. B) low earnings. relative to market prices. C) high interest rates. D) a bear market.

B

If the market multiple is 23.0 and the P/E ratio of a company is 27.4, then the stock's relative P/E is A) 0.84. B) 1.19. C) 3.21. D) 4.40.

D

In the Capital Asset Pricing Model, which of the following factors are used to determine the required rate of return? I. the risk-free interest rate II. future cash flows III. expected return on the market portfolio IV. beta A) I and II only B) I, II and III only C) II, III and IV only D) I, III and IV only

C

Markhem Enterprises is expected to earn $1.34 per share this year. The company has a dividend payout ratio of 40% and a P/E ratio of 18. What should one share of common stock in Markhem Enterprises be selling for in the market? A) $9.65 B) $14.47 C) $24.12 D) $33.77

B

Most analysts would not feel comfortable forecasting a firm's future earnings for more than A) the next quarter. B) 1 to 3 years. C) 4 or 5 years. D) the next business cycle.

D

Over the last year, a firm's earnings per share increased from $1.20 to $1.40, its dividends per share increased from $0.50 to $0.60, and its share price increased from $21 to $24. The firm maintained a relative P/E of 1.10 over the entire time period. Given this information, it follows that the A) stock experienced an increase in its P/E ratio. B) company had a decrease in its dividend payout ratio. C) current P/E of the overall market is 26.4. D) overall market P/E is declining.

A

P/E ratios could rise even as earnings fall if A) earnings fall at a faster rate than stock prices. B) earnings fall at a slower rate than stock prices. C) investors expect lower stock prices to be permanent. D) investors expect lower earnings to be permanent.

A

Stephanie is an investor who believes that the real key to a company's future stock price lies in its future earnings. When investing in a company, she carefully studies its future earnings potential, and sells a company's stock at the first sign of any trouble. This information indicates that Della would correctly be classified as A) a growth investor. B) a value investor. C) a buy-and-hold investor. D) an index investor.

D

The Merry Co. has current annual sales of $350,000 and a net profit margin of 6%. Sales are expected to increase by 5% annually while the profit margin is expected to remain constant. What is the projected after-tax earnings for two years from now? A) $19,294 B) $22,050 C) $23,100 D) $23,153

B

The common stock of Jennifer's Furniture Outlet is currently selling at $32.60 a share. The company adheres to a 60% dividend payout ratio and has a P/E ratio of 19. There are 21,000 shares of stock outstanding. What is the amount of the annual net income for the firm? A) $21,619 B) $36,032 C) $48,327 D) $60,053

C

The current annual sales of Flower Bud, Inc. are $178,000. Sales are expected to increase by 4% next year. The company has a net profit margin of 5% which is expected to remain constant for the next couple of years. There are 10,000 shares of common stock outstanding. The market multiple is 16.4 and the relative P/E of the firm is 1.21. What is the expected market price per share of common stock for next year? A) $15.18 B) $17.66 C) $18.37 D) $19.29

A

The intrinsic value of a stock provides a purchase price for the stock A) that is reasonable given the associated level of risk. B) which will assuredly yield the anticipated capital gain. C) which will guarantee the expected rate of return. D) that is always below the market value but yet yields the expected rate of return.

D

The major forces behind earnings per share are A) return on assets and total asset value. B) gross revenue and the stock price. C) growth and the number of shares outstanding. D) net income and the number of shares outstanding.

C

The risk free rate is 2%. The expected rate of return on the market is 12%. Beta and the expected rate of return for four stocks are as follows.: ABC .8 , 10%; DEF 1, 12%; GHI 1.2 , 13%, and JKL 2, 22%. Which of these stocks should not be purchased? A) ABC B) DEF C) GHI D) JKL

B

The risk-free rate of return is 2.2 percent, the expected market return is 11 percent, and the beta for Solstice, Inc. is 1.12. What is Solstice's required rate of return? A) 8.80% B) 12.05% C) 13.20% D) 14.30%

C

The single most important issue in the stock valuation process is a company's A) past earnings record. B) historic dividend growth rate. C) expected future returns. D) capital structure.

A

The value of a stock is a function of A) future returns. B) historic dividend growth rate. C) most recent earnings per share. D) past returns.

C

Which of the following are key inputs to determining the value of an asset? I. the required rate of return II. future cash flows III. current stock price IV. timing of future cash flows A) I and II only B) I and III only C) I, II and IV only D) II, III and IV only

D

Which of the following characteristics appeal to so-called value investors? I. high P/E ratios. II. low debt to equity ratios III. high cash flow relative to price IV. high book value relative to market price A) I and II only B) I and III only C) I, II and IV only D) II, III and IV only

B

Which of the following contributes to high P/E ratios? A) high dividend payout ratios B) high rate of earnings growth C) periods of high inflation D) high debt ratios

A

Which of the following might cause a firm's P/E ratio to fall? I. Earnings increases in line with past expectations. II. The industry faces increased competition. III. Inflation and interest rates rise. IV. The overall market multiple rises. A) I, II and III only B) I, II and IV only C) I, III and IV only D) I, II, III and IV

D

Which of the following variables affect the P/E ratio? I. capital structure of a firm II. amount of dividends paid III. inflation rate IV. earnings rate of growth A) I, II and III only B) I, II and IV only C) I, III and IV only D) I, II, III and IV

C

Which of the following will lead to an increase in earnings per share? A) an increase in the P/E ratio. B) an increase in the dividend payout ratio. C) an increase in return on equity if book value per share stays the same. D) a decrease in the number of shares if return on equity stays the same.

D

Which of the following will most directly influence a company's market value? A) the state of the economy B) the book value of its assets C) the use of financial leverage D) its future cash flows

B

Which one of the following is a correct equation to calculate earnings per share? A) (ROA)(book value per share) B) (profit margin)(total asset turnover)(equity multiplier)(book value per share) C) (profit margin)(equity multiplier)(book value per share) D) (profit margin)(book value per share)

C

Which one of the following is is most likely to increase the price of a stock? A) rapid growth in sales. B) rapid growth in dividends. C) rapid growth in earnings. D) rapid increases in bond interest rates.

D

Whisper numbers are A) officially published forecast numbers provided by company management. B) the official released estimates prepared by financial analysts. C) generally less accurate than the released estimates by analysts. D) generally higher than the released analysts' forecasts.

D

William is the type of stock market investor who focuses on factors such as a company's book value, debt load, return on equity, and cash flow. In searching for stock investments, he looks at a company's historical performance and attempts to find undervalued stocks. This information indicates that Sam is the type of investor known as A) a growth investor. B) a premium investor. C) an earnings investor. D) a value investor.