BUS 405 Week 2 Chapter 6 Common Stock Valuation

 This pack of BUS 405 Week 2 Chapter 6 Common Stock Valuation contains:


 1. Which one of the following terms is used to identify the evaluation method that determines the value of a stock by reviewing a firm's financial statement in conjunction with other financial and economic information?

 2. The method of valuing a stock based on the present value of the future income derived from that stock is called:

 3. The model used to value a stock that pays a dividend which increases at a constant rate forever is referred to as which one of the following? Assume the growth rate is less than the discount rate.

 4. How is a sustainable dividend growth rate defined?

 5. The portion of net income that is held by a firm, for future growth, comprises which one of the following balance sheet accounts?

 6. What is the percentage of a firm's earnings that is distributed to shareholders called?

 7. What is the percentage of a firm's net income which is reinvested in the firm to support future growth called?

 8. The model used to value the stock of a firm which has a short-term growth rate that varies from its long-term growth rate is called the _____ dividend growth model.

 9. What is beta?

 10. What is the accounting relationship in which earnings per share minus dividends equal the change in book value per share called?

 11. The Free Cash Flow Model:

 I. can be used to value a company with negative earnings

 II. is based on a firm having positive cash flows

 III. requires that a firm pay a dividend

 IV. directly estimates a value for a firm's equity

 12. What is the market value of a share of stock divided by the net income per share called?

 13. The net income per share divided by the market price per share is called the:

 14. Growth stocks are frequently described as having which one of the following characteristics?

 15. The price-book ratio is computed as the market value per share divided by the per share book value of:

 16. A firm's current stock price divided by the firm's revenue per share is referred to as which one of the following ratios?

 17. An analysis of which of the following are commonly included as part of fundamental analysis?

 I. sales

 II. book value

 III. earnings per share

 IV. cash flow

 18. Based on the dividend discount model, an increase in which of the following will lower the current value of a stock?

 I. amount of the next dividend

 II. dividend growth rate

 III. discount rate

 19. The dividend discount model assumes that:

 20. The constant perpetual growth model assumes the:

 21. The constant perpetual growth model is applicable primarily to those firms which:

 22. Which one of the following is a correct formula for computing a geometric average dividend growth rate?

 23. The arithmetic average dividend growth rate is:

 24. The retention ratio is the:

 25. An increase in the retention ratio will:

 26. A decrease in which one of the following will increase a firm's sustainable rate of growth?

 27. The sustainable growth rate is equal to:

 28. Hypo Tech expects its net income to grow at 20 percent a year for the next two years and then taper off to a constant 5 percent annual rate of growth. The firm maintains a constant dividend payout ratio. Which one of the following models is best suited for computing the current value of this firm's stock?

 29. Which one of the following is a requirement of

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