Question 1 (2.5 points)

Higher required returns

Question 1 options:

a)	decrease stock prices

b)	are required by the efficient market hypothesis

c)	increase dividends

d)	are associated with higher dividends

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Question 2 (2.5 points)

A higher beta decreases the required rate of return.

Question 2 options:

	a) True
	b) False

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Question 3 (2.5 points)

A P/E ratio depends on 1. the firm's dividends 2. the price of the stock 3. the firm's per share earnings

Question 3 options:

a)

1 and 2

b)

1 and 3

c)

2 and 3

d)	all of the above

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Question 4 (2.5 points)

The dividend-growth valuation model depends on dividends and the required rate of return.

Question 4 options:

	a) True
	b) False

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Question 5 (2.5 points)

The use of P/E ratios to select stocks suggests that

Question 5 options:

a)	high P/E stocks should be purchased

b)	low P/E ratio stocks are overvalued

c)	a stock should be purchased if it is selling near its historic low P/E

d)	a stock should be purchased if it is selling near its historic high P/E

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Question 7 (2.5 points)

The use of price to book ratios to select stocks suggests that

Question 7 options:

a)	high price to book stocks should be purchased

b)	low price to book stocks are overvalued

c)	a stock should be purchased if it is selling near its historic high price to book ratio

d)	a stock should be purchased if it is selling near its historic low price to book ratio

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Question 8 (2.5 points)

According to the efficient market hypothesis, purchasing low P/S stocks should produce superior investment results.

Question 8 options:

	a) True
	b) False

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Question 9 (2.5 points)

The required rate of return includes the risk-free rate and a risk premium.

Question 9 options:

	a) True
	b) False

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Question 10 (2.5 points)

If the required rate of return is 10 percent and the stock pays a fixed $5 dividend, its value is

Question 10 options:

a)

$100

b)

$75

c)

$50

d)

$25

Question 1 (2.5 points) Higher required returns Question 1 options:a) decrease stock pricesb) are required by the efficient market hypothesisc) increase dividendsd) are associated with higher dividends Save Question 2 (2.5 points) A higher beta decreases the required rate of return. Question 2 options:a) Trueb) False Save Question 3 (2.5 points) A P/E ratio depends on 1. the firm's dividends 2. the price of the stock 3. the firm's per share earnings Question 3 options:a) 1 and 2b) 1 and 3c) 2 and 3d) all of the above Save Question 4 (2.5 points) The dividend-growth valuation model depends on dividends and the required rate of return. Question 4 options:a) Trueb) False Save Question 5 (2.5 points) The use of P/E ratios to select stocks suggests that Question 5 options:a) high P/E stocks should be purchasedb) low P/E ratio stocks are overvaluedc) a stock should be purchased if it is selling near its historic low P/Ed) a stock should be purchased if it is selling near its historic high P/E Save Question 7 (2.5 points) The use of price to book ratios to select stocks suggests that Question 7 options:a) high price to book stocks should be purchasedb) low price to book stocks are overvaluedc) a stock should be purchased if it is selling near its historic high price to book ratiod) a stock should be purchased if it is selling near its historic low price to book ratio Save Question 8 (2.5 points) According to the efficient market hypothesis, purchasing low P/S stocks should produce superior investment results. Question 8 options:a) Trueb) False Save Question 9 (2.5 points) The required rate of return includes the risk-free rate and a risk premium. Question 9 options:a) Trueb) False Save Question 10 (2.5 points) If the required rate of return is 10 percent and the stock pays a fixed $5 dividend, its value is Question 10 options:a) $100b) $75c) $50d) $25