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A stock that does not pay a dividend must have a capital gains yield that is equal to the required return. Select one: True False

please answer both. If a stock's fair return increases, what will happen to the stock's value?   A. It will increase.   B. It will not change.   C. It will decrease.     If the market risk premium rises, what will happen to the stock's price?   A. It will not change.   B. It will increase.   C. It will decrease.

If the intrinsic value of a stock is greater than its market value, which of the following is a reasonable conclusion? O 1. The stock offers a high dividend payout ratio. O 2. The market is overvaluing the stock. O 3. The stock has a low level of risk. O 4. The market is undervaluing the stock.

The​ Dividend-Discount Model​ (DDM) can only be used to value stocks that are currently paying dividends.     True   False

How would you use these to evaluate whether or not a current stock price is perhaps to high (overpriced) or too low (underpriced).

Apart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share Price, Dividend Per Share, ROE and the discount rate (R).  And what are the assumptions and the limitations of this model? Is it the PEG ratio or not??

In efficient markets, the rate of return on a stock should be: A. always greater than the risk-free rate B. Less than zero C. Related to the systemic risk of the stock D. Zero; no stock should earn a positive return

The dividend growth model of stock evaluation relies on several assumptions that might not be true in the real world.  What are they?

Which of the following statements is most accurate in analyzing a stock? If the expected return exceeds itsrequired return__________________a. The stock should be sold.b. The stock is good to buy.c. The management is probably not trying to maximize the price per share.d. Dividends are not likely to be declarede. The stock is experiencing supernormal growth

Let's explore the difference between "expected" and "actual" return of a stock. 1) How might we calculate what the expected return of a stock should be? 2) How might we calculate the "actual" return of a stock?

The constant-growth dividend model will provide invalid solutions when: the growth rate of the stock exceeds the required rate of return for the stock. the growth rate of the stock is less than the required rate of return for the stock. the growth rate of the stock is equal to the risk-free rate. none of the above.

Stocks A and B have the same price and are in equilibrium, but Stock A has the higher required rate of return. Which of the following statements is CORRECT? a. Stock B must have a higher dividend yield than Stock A. b. Stock A must have a higher dividend yield than Stock B. c. If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B's. d. Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B. e. If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B's.

According to the efficient market theory, whenever investors find that the required return of stock is less than the expected return of the stock, the investor will buy the stock.  This will: a. drive the price up b. cause the market to crash c. drive the price down d. not affect the price

Which of the following is FALSE about preferred stock? Select one: a. the value of a preferred stock can be calculated with the perpetuity formula b. preferred stock are expected to pay the same dividend forever c. preferred stocks are more risky than common stocks d. preferred stocks do not mature

What does the capital asset pricing model (CAPM) calculate?   a. The expected rate of return on an individual stock with respect to the risk-free rate of return b. The expected rate of return of an individual stock based on its overall risk c. The expected rate of return of an individual stock with respect to its market risk only d. The expected rate of return of an individual stock reflecting its financial risk Clear my choice