完整word版投资学第7版TestBank答案18.docx
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完整word版投资学第7版TestBank答案18
MultipleChoiceQuestions
1.isequaltothetotalmarketvalueofthefirm'scommonstockdividedby（the
replacementcostofthefirm'sassetslessliabilities）.
A）Bookvaluepershare
B）Liquidationvaluepershare
C）Marketvaluepershare
D）Tobin'sQ
E）Noneoftheabove.
Answer:
DDifficulty:
Easy
Rationale:
Bookvaluepershareisassetsminusliabilitiesdividedbynumberofshares.Liquidationvaluepershareistheamountashareholderwouldreceiveintheeventofbankruptcy.Marketvaluepershareisthemarketpriceofthestock.
2.HighP/Eratiostendtoindicatethatacompanywill,ceterisparibus.
A）growquickly
B）growatthesamespeedastheaveragecompany
C）growslowly
D）notgrow
E）noneoftheabove
Answer:
ADifficulty:
Easy
Rationale:
Investorspayforgrowth;hencethehighP/Eratioforgrowthfirms;however,theinvestorshouldbesurethatheorsheispayingforexpected,nothistoric,growth.
3.isequalto（commonshareholders'equity/commonsharesoutstanding）.
A）Bookvaluepershare
B）Liquidationvaluepershare
C）Marketvaluepershare
D）Tobin'sQ
E）noneoftheabove
Answer:
ADifficulty:
Easy
Rationale:
Seerationalefortestbankquestion18.1
4.areanalystswhouseinformationconcerningcurrentandprospective
profitabilityofafirmstoassessthefirm'sfairmarketvalue.
A）Creditanalysts
B）Fundamentalanalysts
C）Systemsanalysts
D）Technicalanalysts
E）Specialists
Answer:
BDifficulty:
Easy
Rationale:
Fundamentalistsuseallpublicinformationinanattempttovaluestock（whilehopingtoidentifyundervaluedsecurities）.
5.Theisdefinedasthepresentvalueofallcashproceedstotheinvestorinthe
stock.
A）dividendpayoutratio
B）intrinsicvalue
C）marketcapitalizationrate
D）plowbackratio
E）noneoftheabove
Answer:
BDifficulty:
Easy
Rationale:
Thecashflowsfromthestockdiscountedattheappropriaterate,basedontheperceivedriskinessofthestock,themarketriskpremiumandtheriskfreerate,determinetheintrinsicvalueofthestock.
6.istheamountofmoneypercommonsharethatcouldberealizedbybreaking
upthefirm,sellingtheassets,repayingthedebt,anddistributingtheremaindertoshareholders.
A）Bookvaluepershare
B）Liquidationvaluepershare
C）Marketvaluepershare
D）Tobin'sQ
E）Noneoftheabove
Answer:
BDifficulty:
Easy
Rationale:
Seeexplanationfortestbankquestion18.1.
7.Since1955,Treasurybondyieldsandearningsyieldsonstockswere.
A）identical
B）negativelycorrelated
C）positivelycorrelated
D）uncorrelated
Answer:
CDifficulty:
Easy
Rationale:
Theearningsyieldonstocksequalstheexpectedrealrateofreturnonthestockmarket,whichshouldbeequaltotheyieldtomaturityonTreasurybondsplusariskpremium,whichmaychangeslowlyovertime.TheyieldsareplottedinFigure18.8.
8.Historically,P/Eratioshavetendedtobe.
A）higherwheninflationhasbeenhigh
B）lowerwheninflationhasbeenhigh
C）uncorrelatedwithinflationratesbutcorrelatedwithothermacroeconomicvariables
D）uncorrelatedwithanymacroeconomicvariablesincludinginflationrates
E）noneoftheabove
Answer:
BDifficulty:
Easy
Rationale:
P/Eratioshavetendedtobelowerwheninflationhasbeenhigh,reflectingthemarket'sassessmentthatearningsintheseperiodsareof"lowerquality",i.e.,artificiallydistortedbyinflation,andwarrantinglowerP/Eratios.
9.Theisacommontermforthemarketconsensusvalueoftherequiredreturnon
astock.
A）dividendpayoutratio
B）intrinsicvalue
C）marketcapitalizationrate
D）plowbackrate
E）noneoftheabove
Answer:
CDifficulty:
Easy
Rationale:
Themarketcapitalizationrate,whichconsistsoftherisk-freerate,thesystematicriskofthestockandthemarketriskpremium,istherateatwhichastock'scashflowsarediscountedinordertodetermineintrinsicvalue.
10.
11.
12.
Theisthefractionofearningsreinvestedinthefirm.
A）dividendpayoutratio
B）retentionrate
C）plowbackratio
D）AandC
E）BandC
Answer:
EDifficulty:
Easy
Rationale:
Retentionrate,orplowbackratio,representstheearningsreinvestedinthefirm.Theretentionrate,or（1-plowback）=dividendpayout.
TheGordonmodel
A）isageneralizationoftheperpetuityformulatocoverthecaseofagrowingperpetuity.
B）isvalidonlywhengislessthank.
C）isvalidonlywhenkislessthang.
d）AandB.
E）AandC.
Answer:
DDifficulty:
Easy
Rationale:
TheGordonmodelassumesconstantgrowthindefinitely.Mathematically,gmustbelessthank;otherwise,theintrinsicvalueisundefined.
Youwishtoearnareturnof13%oneachoftwostocks,XandY.StockXisexpectedtopayadividendof$3intheupcomingyearwhileStockYisexpectedtopayadividendof$4intheupcomingyear.Theexpectedgrowthrateofdividendsforbothstocksis7%.TheintrinsicvalueofstockX.
A）cannotbecalculatedwithoutknowingthemarketrateofreturn
B）willbegreaterthantheintrinsicvalueofstockY
C）willbethesameastheintrinsicvalueofstockY
D）willbelessthantheintrinsicvalueofstockY
E）noneoftheaboveisacorrectanswer.
Answer:
DDifficulty:
Easy
Rationale:
PVO=D1/（k-g）;givenkandgareequal,thestockwiththelargerdividendwillhavethehighervalue.
B）willbethesameastheintrinsicvalueofstockD
C）willbelessthantheintrinsicvalueofstockD
D）cannotbecalculatedwithoutknowingthemarketrateofreturn
E）noneoftheaboveisacorrectanswer.
Answer:
CDifficulty:
EasyRationale:
PV0=D1/（k-g）;givenkandgareequal,thestockwiththelargerdividendwillhavethehighervalue.
14.Youwishtoearnareturnof12%oneachoftwostocks,AandB.Eachofthestocksisexpectedtopayadividendof$2intheupcomingyear.Theexpectedgrowthrateofdividendsis9%forstockAand10%forstockB.TheintrinsicvalueofstockA.
A）willbegreaterthantheintrinsicvalueofstockB
B）willbethesameastheintrinsicvalueofstockB
C）willbelessthantheintrinsicvalueofstockB
D）cannotbecalculatedwithoutknowingtherateofreturnonthemarketportfolio.
E）noneoftheaboveisacorrectstatement.
Answer:
CDifficulty:
EasyRationale:
PV0=D1/（k-g）;giventhatdividendsareequal,thestockwiththehighergrowthratewillhavethehighervalue.
15.Youwishtoearnareturnof10%oneachoftwostocks,CandD.Eachofthestocksisexpectedtopayadividendof$2intheupcomingyear.Theexpectedgrowthrateofdividendsis9%forstockCand10%forstockD.TheintrinsicvalueofstockC.
A）willbegreaterthantheintrinsicvalueofstockD
B）willbethesameastheintrinsicvalueofstockD
C）willbelessthantheintrinsicvalueofstockD
D）cannotbecalculatedwithoutknowingtherateofreturnonthemarketportfolio.
E）noneoftheaboveisacorrectstatement.
Answer:
CDifficulty:
EasyRationale:
PV0=D1/（k-g）;giventhatdividendsareequal,thestockwiththehighergrowthratewillhavethehighervalue.
16.Eachoftwostocks,AandB,areexpectedtopayadividendof$5intheupcomingyear.Theexpectedgrowthrateofdividendsis10%forbothstocks.Yourequirearateofreturnof11%onstockAandareturnof20%onstockB.TheintrinsicvalueofstockA
A）willbegreaterthantheintrinsicvalueofstockB
B）willbethesameastheintrinsicvalueofstockB
C）willbelessthantheintrinsicvalueofstockB
D）cannotbecalculatedwithoutknowingthemarketrateofreturn.
E）noneoftheaboveistrue.
Answer:
ADifficulty:
Easy
Rationale:
PV0=D1/（k-g）;giventhatdividendsareequal,thestockwiththelargerrequiredreturnwillhavethelowervalue.
17.Eachoftwostocks,CandD,areexpectedtopayadividendof$3intheupcomingyear.Theexpectedgrowthrateofdividendsis9%forbothstocks.Yourequirearateofreturnof10%onstockCandareturnof13%onstockD.TheintrinsicvalueofstockC
A）willbegreaterthantheintrinsicvalueofstockD
B）willbethesameastheintrinsicvalueofstockD
C）willbelessthantheintrinsicvalueofstockD
D）cannotbecalculatedwithoutknowingthemarketrateofreturn.
E）noneoftheaboveistrue.
Answer:
ADifficulty:
Easy
Rationale:
PV0=D1/（k-g）;giventhatdividendsareequal,thestockwiththelargerrequiredreturnwillhavethelowervalue.
18.IftheexpectedROEonreinvestedearningsisequaltok,themultistageDDMreducesto
A）V0=（ExpectedDividendPerShareinYear1）/k
B）V0=（ExpectedEPSinYear1）/k
C）V0=（TreasuryBondYieldinYear1）/k
D）V0=（MarketreturninYear1）/k
E）noneoftheabove
Answer:
BDifficulty:
Moderate
Rationale:
IfROE=k,nogrowthisoccurring;b=0;EPS=DPS
19.LowTechCompanyhasanexpectedROEof10%.Thedividendgrowthratewillbe
ifthefirmfollowsapolicyofpaying40%ofearningsintheformofdividends.
A）6.0%
B）4.8%
C）7.2%
D）3.0%
E）noneoftheabove
Answer:
ADifficulty:
Easy
Rationale:
10%X0.60=6.0%.
20.MusicDoctorsCompanyhasanexpectedROEof14%.Thedividendgrowthratewillbeifthefirmfollowsapolicyofpaying60%ofearningsintheformof
dividends.
A）4.8%
B）5.6%
C）7.2%
D）6.0%
E）noneoftheabove
Answer:
BDifficulty:
Easy
Rationale:
14%X0.40=5.6%.
21.MedtronicCompanyhasanexpectedROEof16%.Thedividendgrowthratewillbe
ifthefirmfollowsapolicyofpaying70%ofearningsintheformofdividends.
A）3.0%
B）6.0%
C）7.2%
D）4.8%
E）noneoftheabove
Answer:
DDifficulty:
Easy
Rationale:
16%X0.30=4.8%.
22.HighSpeedCompanyhasanexpectedROEof15%.Thedividendgrowthratewillbe
ifthefirmfollowsapolicyofpaying50%ofearningsintheformofdividends.
A）3.0%
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