TRUE/FALSE

A. A stock's total return is realized from two principal sources, its dividend yield and any gain from the increase in its selling price over the original purchase price of the stock.

B. The dividend yield is the annual dividend divided by the stock's price.

C. The return on any stock investment is the rate that makes the present value of estimated future cash flows equal to the price paid for the stock today.

D. There is a strong similarity between bonds and stocks because of the nature of the cash flows. Both bonds and stocks offer assurance of regular payments through either dividend or interest, the final sale of stock is similar to the final return of a bond's principal.

E. A principal dissimilarity between bonds and stocks is the lack of a contractual agreement to pay dividends to stockholders, whereas bondholders are guaranteed their interest payment.

F. The return on a share of stock is based on the expected dividend plus the projected selling price, all divided by the projected selling price.

A. The present value of a stock's projected future cash flows is what the share is worth today.

B. A security's value is equal to the future value of its past cash flows.

C. Brokers and frequent investors are more likely to work with earnings per share and price earnings ratios to predict short-term stock price movements than with growth Models.

D. Securities analysis is the art and science of selecting investments.

E. Scholars almost universally support technical analysis because it uses detailed statistical analysis to make predictions.

F. One reason that investors may assign a different value to a stock is due to differences in the appropriate discount rate to use in solving for present values.