18.An analyst can use the expression for P/E to consider whether the forecasts of earnings growth built into the current stock price are reasonable.

True or False

19.From the perspective of a shareholder who buys and holds a share of stock, the cash flows he or she will obtain are the dividends paid on it and the market price of the share when he or she sells it.

True or False

20.DCF analysis involves: (1) choosing the class of DCF model and specific definition of cash flow; (2) forecasting the cash flows; (3) choosing a discount rate methodology; and (4) estimating the appropriate discount rate.

True or False

21.A multi-stage discounted cash flow model (such as the two-stage DDM) is useful because many scenarios exist in which a company can achieve a supernormal growth rate for a number of years, after which time the growth rate falls to a more sustainable level.

True or False

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