1. Which of the following statements best describes how a change in a firm's stock price would...
Question:
a) The capital gains yield on a stock that the investor already owns has a direct relationship with the firm's expected future stock price.
b) The capital gains yield on a stock that the investor already owns has an inverse relationship with the firm's expected future stock price.
2. Which of the following statements will always hold true?
a) It will never be appropriate for a rapidly growing startup company that pays no dividends at present-but is expected to pay dividends at some point in the future-to use the constant growth valuation formula.
b) The constant growth valuation formula is not appropriate to use for zero growth stocks.
c) The constant growth valuation formula is not appropriate to use unless the company's growth rate is expected to remain constant in the future.
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Related Book For 
Financial Accounting and Reporting a Global Perspective
ISBN: 978-1408076866
4th edition
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
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