金融市场与机的构Madura第九版题库ch11

©2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter11StockValuationandRisk1.Thecommonprice-earningsvaluationmethodappliedthe______price-earningsratioto________earningspershareinordertovaluethefirm’sstock.A)firm’s;industryB)firm’s;firm’sC)averageindustry;industryD)averageindustry;firm’sANSWER:D2.Afirmisexpectedtogenerateearningsof$2.22persharenextyear.Themeanratioofsharepricetoexpectedearningsofcompetitorsinthesameindustryis15.Basedonthisinformation,thevaluationofthefirm’ssharesbasedontheprice-earnings(PE)methodisA)$2.22.B)$6.76.C)$33.30.D)noneoftheaboveANSWER:C3.ThePEmethodtostockvaluationmayresultinaninaccuratevaluationforafirmiferrorsaremadeinforecastingthefirm’sfutureearningsorinchoosingtheindustrycompositeusedtoderivethePEratio.A)TrueB)FalseANSWER:A4.BolworkInc.isexpectedtopayadividendof$5persharenextyear.Bolwork’sdividendsareexpectedtogrowby3percentannually.TherequiredrateofreturnforBolworkstockis15percent.Basedonthedividenddiscountmodel,afairvalueforBolworkstockis$_______pershare.A)33.33B)166.67C)41.67D)60.00ANSWER:C5.ProtskyInc.justpaidadividendof$2.20pershare.ThedividendgrowthrateforProtsky’sdividendsis3percentperyear.IftherequiredrateofreturnonProtskystockis12percent,thestockshouldbevaluedat$_______pershareaccordingtothedividenddiscountmodel.A)24.44B)25.182StockValuationandRisk©2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.C)18.88D)75.53ANSWER:B6.ThelimitationsofthedividenddiscountmodelaremorepronouncedwhenvaluingstocksA)thatpaymostoftheirearningsasdividends.B)thatretainmostoftheirearnings.C)thathavealonghistoryofdividends.D)thathaveconstantearningsgrowth.ANSWER:B7.HancockInc.retainsmostofitsearnings.Thecompanycurrentlyhasearningspershareof$11.Hancockexpectsitsearningstogrowataconstantrateof2percentperyear.Furthermore,theaveragePEratioofallotherfirmsinHancock’sindustryis12.Hancockisexpectedtopaydividendspershareof$3.50duringeachofthenextthreeyears.Ifinvestorsrequirea10percentrateofreturnonHancockstock,afairpriceforHancockstocktodayis$________.A)113.95B)111.32C)105.25D)noneoftheaboveANSWER:A8.Whenevaluatingstockperformance,______measuresvariabilitythatissystematicallyrelatedtomarketreturns;______measurestotalvariabilityofastock’sreturns.A)beta;standarddeviationB)standarddeviation;betaC)intercept;betaD)beta;errortermANSWER:A9.The___________iscommonlyusedasaproxyfortherisk-freerateintheCapitalAssetPricingModel.A)TreasurybondrateB)primerateC)discountrateD)federalfundsrateANSWER:A10.Arbitragepricingtheory(APT)suggeststhatastock’spriceisinfluencedonlybyastock’sbeta.A)TrueB)FalseANSWER:BStockValuationandRisk3©2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.11.StockpricesofU.S.firmsprimarilyinvolvedinexportingarelikelytobe________affectedbyaweakdollarand__________affectedbyastrongdollar.A)favorably;adverselyB)adversely;adverselyC)favorably;favorablyD)adversely;favorablyANSWER:A12.AweakdollarmayenhancethevalueofaU.S.firmwhosesalesaredependentontheU.S.economy.A)TrueB)FalseANSWER:A13.TheJanuaryeffectreferstothe__________pressureon______stocksinJanuaryofeveryyear.A)downward;largeB)upward;largeC)downward;smallD)upward;smallANSWER:D14.Theexpectedacquisitionofafirmtypicallyresultsin____________inthetarget’sstockprice.A)anincreaseB)adecreaseC)nochangeD)noneoftheaboveANSWER:A15.The_______indexcanbeusedtomeasurerisk-adjustedperformanceofastockwhilecontrollingforthestock’svolatility.A)SharpeB)TreynorC)arbitrageD)marginANSWER:A16.The_______indexcanbeusedtomeasurerisk-adjustedperformanceofastockwhilecontrollingforthestock’sbeta.A)SharpeB)TreynorC)arbitrageD)marginANSWER:B4StockValuationandRisk©2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.17.Stockpricevolatilityincreasedduringthecreditcrisis.A)TrueB)FalseANSWER:A18.TheSharpeIndexmeasurestheA)averagereturnonastock.B)variabilityofstockreturnsperunitofreturnC)stock’sbetaadjustedforrisk.D)excessreturnabovetherisk-freerateperunitofrisk.ANSWER:D19.Astock’saveragereturnis11percent.Theaveragerisk-freerateis9percent.Thestock’sbetais1anditsstandarddeviationofreturnsis10percent.WhatistheSharpeIndex?A).05B).5C).1D).02E).2ANSWER:E20.Astock’saveragereturnis10percent.Theaveragerisk-freerateis7percent.Thestandarddeviationofthestock’sreturnis4percent,andthestock’sbetais1.5.WhatistheTreynorIndexforthestock?A).03B).75C)1.33D).02E)50ANSWER:D21.Ifsecuritypricesfullyreflectallmarket-relatedinformatio