Quiz Ch 04 – Factors Influencing Common Stock Valuation
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What is the primary determinant of the valuation of common stock today?
What is the primary determinant of the valuation of common stock today?
What are these ratios that influence the growth rate in dividends?
Which formula accurately represents the earnings-to-price ratio?
Which is classified as a growth stock?
True or false: Owners of common stocks receive their only returns through cash dividends.
True or false: The cost of equity capital for a constant dividend growth stock is calculated as the difference between the dividend yield and the growth rate in dividends.
True or false: The expected return from a common stock, also known as its market capitalization rate or cost of equity capital, is anticipated by investors.
True or false: The present value of growth opportunities makes up a substantial portion of the total value of a growth stock.
True or false: The constant growth model, used for stock valuation, does not apply to companies experiencing a negative growth rate in their dividends, indicating a decline in growth.
True or false: Securities belonging to the same risk class are priced to yield the same expected return.