Homework Answers
17) The correct answer is (d)
Price to sales ratio
Price to sales ratio is more appropriate for companies that don’t have earnings, these are the companies that are yet to turn into profits and price to sales gives a good indicator about the company future potential.
18) The correct answer is (c)
Equity shareholders
Residual claimants mean the person who is last paid the profits and it is the owners who keeps all the profits after considering the expenditure. The equity shareholders are the owner’s, also referred to as residual claimant.
19) The correct answer is (b)
It is easier for companies to manipulate their earnings than their cash flows.
The companies can manipulate the earnings by recording revenue at early stage and it can boost up the earnings but companies can not manipulate the cashflow. Cash flow shows the movement of cash in and out of the company.
20) the correct answer is (a)
More, European
An American option is more valuable because it can be exercised earlier but European option can be exercised only on the expiration.
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questions 17-20 please
17. Which of the following valuation measures is often used to compare firms...
Question 2: Indicate whether the following statements are True or False: a) If time to maturity,...
Question 2: Indicate whether the following statements are True or False: a) If time to maturity, is greater than time to maturity2 then American call optionis less than American call option2 b) If volatility, is greater than volatility2 then European call option; is greater than European call option2 c) Asian options are less valuable than European options d) Barrier options are less valuable than European options e) Strike Call Option Price 30 35 f) Strike Put Option Price 15 20...
on the market excceds the earning per share s used to calculate the number of times...
on the market excceds the earning per share s used to calculate the number of times the price being paid for on the market exceeds the dividend per share. s a measure of confidence in the ability of the company to maintain its earnings in future The P/E ratio represents a d. the value of a share of stock in the market oltiplier pplied to current earnings to determine Table I: Net cash flows for three Project Z Project X...
For answering Questions 17 to 20, refer to the following figures extracted from the financial statements...
For answering Questions 17 to 20, refer to the following figures extracted from the financial statements of Blunt Ltd. Sales Cost of sales Profit before interest and tax Fixed assets Depreciation Stock Debtors Cash at bank Creditors Long-term loans 2,700 1,950 300 1,500 150 1,050 750 150 900 450 17) What is the quick ratio? a) 100-1 b) 217:1 c) 083-1 d) 333:1 e) none of the above 18) What is the net working capital? a) 1,050 b) 1,950 c)...
Which one of the following factors is not considered calculating a firm’s PEG ratio? Projected growth...
Which one of the following factors is not considered calculating a firm’s PEG ratio? Projected growth rate of the value indicator (e.g., earnings) Ratio of market price to value indicator (e.g., P/E) Share exchange ratio Historical growth rate of the value indicator None of the above 2. In determining the purchase price for an acquisition target, which one of the following valuation methods does not require the addition of a purchase price premium? Discounted cash flow method Comparable companies’ method...
Use the following information for questions 6-11. A BB+ rated firm (0.8., a high yield or...
Use the following information for questions 6-11. A BB+ rated firm (0.8., a high yield or non-investment grade) has issued a callable bond with the following features: • Exactly 2 years to maturity • 9% annual coupon • $100 par value • The bond is callable in exactly one year for par value. 6. Relative to a non-callable bond with identical features, the price of the callable bond will be a. Lower, because the buyer of the bond is also...
17. Which of the following below should be added to net income in calculating net cash...
17. Which of the following below should be added to net income in calculating net cash flow from operating activities using the indirect method A. Gain on the sale of land. B. An increase in salaries payable. C. A decrease in accounts payable. D. An increase in accounts receivable. 18. Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows. A. True B. False...
17. Which of the following below should be added to set income in calculating net cash...
17. Which of the following below should be added to set income in calculating net cash flow from operating activities using the indirect method. A. Gain on the sale of land. B. An increase in salaries payable. C. A decrease in accounts payable. D. An increase in accounts receivable. 18. Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows. A. True. B. False....
questions 13-16 please the required 13. An underpriced stock provides an expected return that is return...
questions 13-16 please
the required 13. An underpriced stock provides an expected return that is return based on the capital asset pricing model (CAPM). A. Less than B. Equal to C. Greater than D. Greater than or equal to E. None of the above 14. The constant-growth dividend discount model (DDM) can be used only when the A. Growth rate is less than or equal to the required return B. Growth rate is greater than or equal to the required...
questions 9-12 please 9. If a firm increases its plowback ratio, this will probably result in...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
our Section: 1. Which of the following trading strategy prefers the options to be out-of-the-money! A....
our Section: 1. Which of the following trading strategy prefers the options to be out-of-the-money! A. Selling Put B. Selling Call C. Covered Call D. All above E. None above 2. Which of the following option strategy requires the SAME exercise price of options? A. Bearish spread B. Bullish spread C. Straddle D. All above E. None above 3. An European put option gives its holder the right to : A. buy the underlying asset at the exercise price on...
Question 2: Indicate whether the following statements are True or False: a) If time to maturity, is greater than time to maturity2 then American call optionis less than American call option2 b) If volatility, is greater than volatility2 then European call option; is greater than European call option2 c) Asian options are less valuable than European options d) Barrier options are less valuable than European options e) Strike Call Option Price 30 35 f) Strike Put Option Price 15 20...
on the market excceds the earning per share s used to calculate the number of times the price being paid for on the market exceeds the dividend per share. s a measure of confidence in the ability of the company to maintain its earnings in future The P/E ratio represents a d. the value of a share of stock in the market oltiplier pplied to current earnings to determine Table I: Net cash flows for three Project Z Project X...
For answering Questions 17 to 20, refer to the following figures extracted from the financial statements of Blunt Ltd. Sales Cost of sales Profit before interest and tax Fixed assets Depreciation Stock Debtors Cash at bank Creditors Long-term loans 2,700 1,950 300 1,500 150 1,050 750 150 900 450 17) What is the quick ratio? a) 100-1 b) 217:1 c) 083-1 d) 333:1 e) none of the above 18) What is the net working capital? a) 1,050 b) 1,950 c)...
Use the following information for questions 6-11. A BB+ rated firm (0.8., a high yield or non-investment grade) has issued a callable bond with the following features: • Exactly 2 years to maturity • 9% annual coupon • $100 par value • The bond is callable in exactly one year for par value. 6. Relative to a non-callable bond with identical features, the price of the callable bond will be a. Lower, because the buyer of the bond is also...
17. Which of the following below should be added to net income in calculating net cash flow from operating activities using the indirect method A. Gain on the sale of land. B. An increase in salaries payable. C. A decrease in accounts payable. D. An increase in accounts receivable. 18. Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows. A. True B. False...
17. Which of the following below should be added to set income in calculating net cash flow from operating activities using the indirect method. A. Gain on the sale of land. B. An increase in salaries payable. C. A decrease in accounts payable. D. An increase in accounts receivable. 18. Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows. A. True. B. False....
questions 13-16 please
the required 13. An underpriced stock provides an expected return that is return based on the capital asset pricing model (CAPM). A. Less than B. Equal to C. Greater than D. Greater than or equal to E. None of the above 14. The constant-growth dividend discount model (DDM) can be used only when the A. Growth rate is less than or equal to the required return B. Growth rate is greater than or equal to the required...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
our Section: 1. Which of the following trading strategy prefers the options to be out-of-the-money! A. Selling Put B. Selling Call C. Covered Call D. All above E. None above 2. Which of the following option strategy requires the SAME exercise price of options? A. Bearish spread B. Bullish spread C. Straddle D. All above E. None above 3. An European put option gives its holder the right to : A. buy the underlying asset at the exercise price on...
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