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"Dividend paying stocks cannot be growth stocks" Do you agree or disagree? Discuss choosing two stocks to help justify your view.
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- Discuss the importance of market efficiency and explain why some markets are more efficient than others. •Explain the distinction between a stock's price and its intrinsic value, then discuss the two models that can be used to estimate a stock's intrinsic value.What information is needed to determine the value of a stock using the zero-growth model? More than one answer may be correct. Multiple select question. Required return Dividends Capital gains Future price of the stockHow would you use these to evaluate whether or not a current stock price is perhaps to high (overpriced) or too low (underpriced).
- What could you comment on this statement? "Caution is warranted when using PE ratio to value stocks"How does the Efficient Market Hypothesis (EMH) explain stock price behavior, and what are the implications for investors? Describe the three forms of EMH and discuss whether active or passive management is more suitable in light of this theory.3) Understanding if a stock is undervalued or overvalued will influence if the investor will invest in the stock at the current moment of the analysis. T/F
- Describe in your own words the characteristics of growth and value stocks. Which type of stock is better and why?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??What is meant by stock market efficiency? Name and explain three forms of stock market efficiency. Which form is most likely to hold? Which is least likely to hold?
- 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 choiceFind out the QuestionExplain the effect of D/E on asset returns, equity returns (assuming that cost of debt is not affected), asset beta and equity beta (assuming that debt beta is zero). Should an investor choose to invest in a stock of a company with high or low D/E, or why expected returns on these stocks are equivalent, although they are not equal?
