Answer - Option D
Current value of an asset is present value of cash flows expected in future, discounted at required rate of return. Based on this statement,we definitely need 'Required rate of return'. In order to calculate the PV, we would also need the cash flows and their timing to determine the present value of those.
18) Which of the following are key inputs to determining the current value of an asset?...
Which of the following affect current stock price? 1. Dividend growth rate II. Required return III. Current dividend IV. Expected dividend next year Select one: a. I and III only b. ll and IV only c. 1, 11, III and IV d. I, II, and IV only
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock price at any point in time. III. requires the required return to be higher than the growth rate. IV. assumes that dividends increase by a constant amount forever. V. none of the above is correct Multiple Choice 0 II, and IV only 0 V only 0 1, I, II, and IV only 0 Ill only 0 In order to estimate...
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. 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...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value B) the expected rate of rectum equals or exceeds the required turn C) the capital gains rate is less than the required rumande dividends are paid D) the market price is greater than the justified price Answer 2) Which of the following variables used in determining a stock's intrinsic als can be known with the greatest level of confidence A] future carmings B) expected...
Which of the following affect current stock price? I. Dividend growth rate II. Required return III. Current dividend IV. Expected dividend next year
Which of the following have been offered as justification for stock price declines following an SEO announcement? I. Investors assume managers issue stock when shares are overvalued. II. Corporate taxes imposed on stock offerings lower the value of the issuer's cash flows. III. Issuing equity may be considered a signal that the issuer has too much debt. IV. Issue costs reduce the value of the issuing firm. Multiple Choice I and III only II and IV only I, III, and...
Which of the following will decrease if the coupon rate decreases? I. Market Value II. Face Value III. Current Yield IV. Yield-to-Maturity A) I, II and III only B) I, III and IV only C) I and II only D) I and IV only
1. Which of the following is (are) feature(s) of preferred stock? I. It generally has a fixed dividend. II. It generally has a dividend that increases annually. III. It receives preference in bankruptcy over common stock. IV. It receives preference in bankruptcy over secured bond holders. a) II and IV only b) I and III only c) I only d) II and III only e) I and IV only 2. A System pays a constant annual dividend. Over the past...
Which of the following can result in an increase in firm value? I. Reducing net capital expenditures on existing assets II. Increasing the reinvestment rate of the firm III. Improving operating margins on existing assets Select one: a. I only b. I and II only c. I and III only d. II and III only e. I, II, and III only f. None of the above Which of the following statements is true concerning EVA? I. EVA will be positive when the...
Question 22 of 25 1 Points Which of the following is TRUE? i. We can evaluate two projects with different timing of cash flows using the IRR rule, ll. The hurdle rate of the IRR rule is arbitrary (random), H. The payback period is the time until the sum of the present value of future cash flows equals the initial investment. I. IRR rule ignores distant cash flows while the NPV rule does not O A. II, III, IV OB.Iv...