投資學(xué)第7版TestBank答案完整可編輯版

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1、Multiple Choice Questions 1. is equal to the total market value of the firms common stock divided by (the replacement cost of the firms assets less liabilities). A) Book value per share B) Liquidation value per share C) Market value per share D) Tobins Q E) None ofthe above. Answer: D Difficu

2、lty: Easy Rationale: Book value per share is assets minus liabilities divided by number of shares. Liquidation value per share is the amount a shareholderwould receive in the event of bankruptcy. Market value per share is the market price of the stock. 2. High P/E ratios tend to indicate that a co

3、mpany will, ceteris paribus. A) grow quickly B) grow at the same speed as the average company C) grow slowly D) not grow E) none of the above Answer: A Difficulty: Easy Rationale: Investors pay for growth; hence the high P/E ratio for growth firms; however, the investor should be sure that he

4、 or she is paying for expected, not historic, growth. 3. is equal to (common shareholders equity/common shares outstanding). A) Book value per share B) Liquidation value per share C) Market value per share D) Tobins Q E) none of the above Answer: A Difficulty: Easy Rationale: See rationale

5、for test bank question 18.1 精選范本，供參考! 4. are analysts who use information concerning current and prospective profitability of a firms to assess the firms fair market value. A) Credit analysts B) Fundamental analysts C) Systems analysts D) Technical analysts E) Specialists Answer: B Diffi

6、culty: Easy Rationale: Fundamentalists use all public information in an attempt to value stock (while hoping to identify undervalued securities). 5. The is defined as the present value of all cash proceeds to the investor in the stock. A) dividend payout ratio B) intrinsic value C) market cap

7、italization rate D) plowback ratio E) none of the above Answer: B Difficulty: Easy Rationale: The cash flows from the stock discounted at the appropriate rate, based on the perceived riskiness of the stock, the market risk premium and the risk free rate, determine the intrinsic value of the stoc

8、k. 6. is the amount of money per common share that could be realized by breaking up the firm, selling the assets, repaying the debt, and distributing the remainder to shareholders. A) Book value per share B) Liquidation value per share C) Market value per share D) Tobins Q E) None of the abo

9、ve Answer: B Difficulty: Easy Rationale: See explanation for test bank question 18.1. 精選范本 ,供參考！ 7. Since 1955, Treasury bond yields and earnings yields on stocks were. A) identical B) negatively correlated C) positively correlated D) uncorrelated Answer: C Difficulty: Easy Rationale: Th

10、e earnings yield on stocks equals the expected real rate of return on the stock market, which should be equal to the yield to maturity on Treasury bonds plus a risk premium, which may change slowly over time. The yields are plotted in Figure 18.8. 8. Historically, P/E ratios have tended to be. A)

11、higher when inflation has been high B) lower when inflation has been high C) uncorrelated with inflation rates but correlated with other macroeconomic variables D) uncorrelated with any macroeconomic variables including inflation rates E) none of the above Answer: B Difficulty: Easy Rationale: P

12、/E ratios have tended to be lowerwhen inflation has been high, reflecting the markets assessment that earnings in these periods are of "lower quality", i.e., artificially distorted by inflation, and warranting lower P/E ratios. 9. The is a common term for the market consensus value of the required

13、return on a stock. A) dividend payout ratio B) intrinsic value C) market capitalization rate D) plowback rate E) none of the above Answer: C Difficulty: Easy Rationale: The market capitalization rate, which consists of the risk-free rate, the systematic risk of the stock and the market risk p

14、remium, is the rate at which a stocks cash flows are discounted in order to determine intrinsic value. 10. The is the fraction of earnings reinvested in the firm. A) dividend payout ratio B) retention rate C) plowback ratio D) A and C E) B and C Answer: E Difficulty: Easy Rationale: Retentio

15、n rate, or plowback ratio, represents the earnings reinvested in the firm. The retention rate, or (1 - plowback) = dividend payout. 11. The Gordon model A) is a generalization of the perpetuity formula to cover the case of a growing perpetuity. B) is valid only when g is less thank. C) is valid

16、only when k is less thang. D) A and B. E) A and C. Answer: D Difficulty: Easy Rationale: The Gordon model assumes constant growth indefinitely. Mathematically, g must be less than k; otherwise, the intrinsic value is undefined. 12. You wish to earn a return of 13% on each of two stocks, X and Y

17、. Stock X is expected to pay a dividend of $3 in the upcoming year while Stock Y is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X. A) cannot be calculated without knowing the market rate of return

18、B) will be greater than the intrinsic value of stock Y C) will be the same as the intrinsic value of stock Y D) will be less than the intrinsic value of stock Y E) none of the above is a correct answer. Answer: D Difficulty: Easy Rationale: PV0 = D1/(k-g); given k and g are equal, the stock wit

19、h the larger dividend will have the higher value. 精選范本，供參考! 13. You wish to earn a return of 11% on each of two stocks, C and D. Stock C is expected to pay a dividend of $3 in the upcoming year while Stock D is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of di

20、vidends for both stocks is 7%. The intrinsic value of stock C . A) will be greater than the intrinsic value of stock D B) will be the same as the intrinsic value of stock D C) will be less than the intrinsic value of stock D D) cannot be calculated without knowing the market rate of return E)

21、none of the above is a correct answer. Answer: C Difficulty: Easy Rationale: PV0 = D1/(k-g); given k and g are equal, the stock with the larger dividend will have the higher value. 14. You wish to earn a return of 12% on each of two stocks, A and B. Each of the stocks is expected to pay a dividen

22、d of $2 in the upcoming year. The expected growth rate of dividends is 9% for stock A and 10% for stock B. The intrinsic value of stock A . A) will be greater than the intrinsic value of stock B B) will be the same as the intrinsic value of stock B C) will be less than the intrinsic value of stock

23、 B D) cannot be calculated without knowing the rate of return on the market portfolio. E) none of the above is a correct statement. Answer: C Difficulty: Easy Rationale: PV0 = D1/(k-g); given that dividends are equal, the stock with the higher growth rate will have the higher value. 15. You wis

24、h to earn a return of 10% on each of two stocks, C and D. Each of the stocks is expected to pay a dividend of $2 in the upcoming year. The expected growth rate of dividends is 9% for stock C and 10% for stock D. The intrinsic value of stock C . A) will be greater than the intrinsic value of stock

25、D B) will be the same as the intrinsic value of stock D C) will be less than the intrinsic value of stock D D) cannot be calculated without knowing the rate of return on the market portfolio. E) none of the above is a correct statement. Answer: C Difficulty: Easy Rationale: PV0 = D1/(k-g); given

26、 that dividends are equal, the stock with the higher growth rate will have the higher value. 16. Each of two stocks, A and B, are expected to pay a dividend of $5 in the upcoming year. The expected growth rate of dividends is 10% for both stocks. You require a rate of return of 11% on stock A and a

27、 return of 20% on stock B. The intrinsic value of stock A A) will be greater than the intrinsic value of stock B B) will be the same as the intrinsic value of stock B C) will be less than the intrinsic value of stock B D) cannot be calculated without knowing the market rate of return. E) none o

28、f the above is true. Answer: A Difficulty: Easy Rationale: PV0 = D1/(k-g); given that dividends are equal, the stock with the larger required return will have the lower value. 17. Each of two stocks, C and D, are expected to pay a dividend of $3 in the upcoming year. The expected growth rate of d

29、ividends is 9% for both stocks. You require a rate of return of 10% on stock C and a return of 13% on stock D. The intrinsic value of stock C A) will be greater than the intrinsic value of stock D B) will be the same as the intrinsic value of stock D C) will be less than the intrinsic value of st

30、ock D D) cannot be calculated without knowing the market rate of return. E) none of the above is true. Answer: A Difficulty: Easy Rationale: PV0 = D1/(k-g); given that dividends are equal, the stock with the larger required return will have the lower value. 18. If the expected ROE on reinvested

31、 earnings is equal to k, the multistage DDM reduces to A) V0 = (Expected Dividend Per Share in Year 1)/k B) V0 = (Expected EPS in Year 1)/k C) V0 = (Treasury Bond Yield in Year 1)/k D) V0 = (Market return in Year 1)/k E) none of the above Answer: B Difficulty: Moderate Rationale: If ROE = k,

32、no growth is occurring; b = 0; EPS = DPS 19. Low Tech Company has an expected ROE of 10%. The dividend growth rate will be if the firm follows a policy of paying 40% of earnings in the form of dividends. A) 6.0% B) 4.8% C) 7.2% D) 3.0% E) none of the above Answer: A Difficulty: Easy Rationa

33、le: 10% X 0.60 = 6.0%. 20. Music Doctors Company has an expected ROE of 14%. The dividend growth rate will be if the firm follows a policy of paying 60% of earnings in the form of dividends. A) 4.8% B) 5.6% C) 7.2% D) 6.0% E) none of the above Answer: B Difficulty: Easy Rationale: 14% X 0.

34、40 = 5.6%. 21. Medtronic Company has an expected ROE of 16%. The dividend growth rate will be if the firm follows a policy of paying 70% of earnings in the form of dividends. A) 3.0% B) 6.0% C) 7.2% D) 4.8% E) none of the above Answer: D Difficulty: Easy Rationale: 16% X 0.30 = 4.8%. 精選范本

35、,供參考！ 22. High Speed Company has an expected ROE of 15%. The dividend growth rate will be if the firm follows a policy of paying 50% of earnings in the form of dividends. A) 3.0% B) 4.8% C) 7.5% D) 6.0% E) none of the above Answer: C Difficulty: Easy Rationale: 15% X 0.50 = 7.5%. 23. Li

36、ght Construction Machinery Company has an expected ROE of 11%. The dividend growth rate will be if the firm follows a policy of paying 25% of earnings in the form of dividends. A) 3.0% B) 4.8% C) 8.25% D) 9.0% E) none of the above Answer: C Difficulty: Easy Rationale: 11% X 0.75 = 8.25%. 2

37、4. Xlink Company has an expected ROE of 15%. The dividend growth rate will be if the firm follows a policy of plowing back 75% of earnings. A) 3.75% B) 11.25% C) 8.25% D) 15.0% E) none of the above Answer: B Difficulty: Easy Rationale: 15% X 0.75 = 11.25%. 25. Think Tank Company has an exp

38、ected ROE of 26%. The dividend growth rate will be if the firm follows a policy of plowing back 90% of earnings. A) 2.6% B) 10% C) 23.4% D) 90% E) none of the above Answer: C Difficulty: Easy Rationale: 26% X 0.90 = 23.4%. 26. Bubba Gumm Company has an expected ROE of 9%. The dividend grow

39、th rate will be if the firm follows a policy of plowing back 10% of earnings. A) 90% B) 10% C) 9% D) 0.9% E) none of the above Answer: D Difficulty: Easy Rationale: 9% X 0.10 = 0.9%. 27. A preferred stock will pay a dividend of $2.75 in the upcoming year, and every year thereafter, i.e., d

40、ividends are not expected to grow. You require a return of 10% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock. A) $0.275 B) $27.50 C) $31.82 D) $56.25 E) none of the above Answer: B Difficulty: Moderate Rationale: 2.75 / .10 = 27.50 28. A

41、preferred stock will pay a dividend of $3.00in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 9% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock. A) $33.33 B) $0..27 C) $31.82 D)

42、$56.25 E) none of the above Answer: A Difficulty: Moderate Rationale: 3.00 / .09 = 33.33 29. A preferred stock will pay a dividend of $1.25 in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 12% on this stock. Use the constant growth

43、 DDM to calculate the intrinsic value of this preferred stock. A) $11.56 B) $9.65 C) $11.82 D) $10.42 E) none of the above Answer: D Difficulty: Moderate Rationale: 1.25 / .12 = 10.42 30. A preferred stock will pay a dividend of $3.50 in the upcoming year, and every year thereafter, i.e., div

44、idends are not expected to grow. You require a return of 11% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock. A) $0.39 B) $0.56 C) $31.82 D) $56.25 E) none of the above Answer: C Difficulty: Moderate Rationale: 3.50 / .11 = 31.82 31. A prefe

45、rred stock will pay a dividend of $7.50 in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 10% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock. A) $0.75 B) $7.50 C) $64.12 D) $56.2

46、5 E) none of the above Answer: E Difficulty: Moderate Rationale: 7.50 / .10 = 75.00 32. A preferred stock will pay a dividend of $6.00 in the upcoming year, and every year thereafter, i.e., dividends are not expected to grow. You require a return of 10% on this stock. Use the constant growth DDM

47、to calculate the intrinsic value of this preferred stock. A) $0.60 B) $6.00 C) $600 D) $5.40 E) none of the above Answer: E Difficulty: Moderate Rationale: 6.00 / .10 = 60.00 33. You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both

48、$1.25 in dividends and $32 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is if you wanted to earn a 10% return. A) $30.23 B) $24.11 C) $26.52 D) $27.50 E) none of the above Answer: A Difficulty: Moderate Rationale: .10 = (32 - P + 1.2

49、5) / P; .10P = 32 - P + 1.25; 1.10P = 33.25; P = 30.23. 34. You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both $0.75 in dividends and $16 from the sale of the stock at the end of the year. The maximum price you would pay for the stock t

50、oday is if you wanted to earn a 12% return. A) $23.91 B) $14.96 C) $26.52 D) $27.50 E) none of the above Answer: B Difficulty: Moderate Rationale: .12 = (16 - P + 0.75) / P; .12P = 16 - P + 0.75; 1.12P = 16.75; P = 14.96. 35. You are considering acquiring a common stock that you would like

51、 to hold for one year. You expect to receive both $2.50 in dividends and $28 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is if you wanted to earn a 15% return. A) $23.91 B) $24.11 C) $26.52 D) $27.50 E) none of the above Answer: C Di

52、fficulty: Moderate Rationale: .15 = (28 - P + 2.50) / P; .15P = 28 - P + 2.50; 1.15P = 30.50; P = 26.52. 36. You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both $3.50 in dividends and $42 from the sale of the stock at the end of the yea

53、r. The maximum price you would pay for the stock today is if you wanted to earn a 10% return. A) $23.91 B) $24.11 C) $26.52 D) $27.50 E) none of the above Answer: E Difficulty: Moderate Rationale: .10 = (42 - P + 3.50) / P; .10P = 42 - P + 3.50; 1.1P = 45.50; P = 41.36. Use the following t

54、o answer questions 37-40: Paper Express Company has a balance sheet which lists $85 million in assets, $40 million in liabilities and $45 million in common shareholders equity. It has 1,400,000 common shares outstanding. The replacement cost of the assets is $115 million. The market share price is

55、$90. 37. What is Paper Expresss book value per share? A) $1.68 B) $2.60 C) $32.14 D) $60.71 E) none of the above Answer: C Difficulty: Moderate Rationale: $45M/1.4M = $32.14. 38. What is Paper Expresss market value per share? A) $1.68 B) $2.60 C) $32.14 D) $60.71 E) none of the above

56、Answer: E Difficulty: Easy 39. What is Paper Expresss replacement cost per share? A) $1.68 B) $2.60 C) $53.57 D) $60.71 E) none of the above Answer: C Difficulty: Moderate Rationale: $115M - 40M/1.4M = $53.57. 40. What is Paper Expresss Tobins q? A) 1.68 B) 2.60 C) 53.57 D) 60.71 E) no

57、ne of the above Answer: A Difficulty: Moderate Rationale: $90/ 53.57 = 1.68 41. One of the problems with attempting to forecast stock market values is that A) there are no variables that seem to predict market return. B) the earnings multiplier approach can only be used at the firm level. C) t

58、he level of uncertainty surrounding the forecast will always be quite high. D) dividend payout ratios are highly variable. E) none of the above. Answer: C Difficulty: Easy Rationale: Although some variables such as market dividend yield appear to be strongly related to market return, the market

59、has great variability and so the level of uncertainty in any forecast will be high. 42. The most popular approach to forecasting the overall stock market is to use A) the dividend multiplier. B) the aggregate return on assets. C) the historical ratio of book value to market value. D) the aggreg

60、ate earnings multiplier. E) Tobins Q. Answer: D Difficulty: Easy Rationale: The earnings multiplier approach is the most popular approach to forecasting the overall stock market. Use the following to answer questions 43-44: Sure Tool Company is expected to pay a dividend of $2 in the upcoming y

61、ear. The risk-free rate of return is 4% and the expected return on the market portfolio is 14%. Analysts expect the price of Sure Tool Company shares to be $22 a year from now. The beta of Sure Tool Companys stock is 1.25. 43. The markets required rate of return on Sures stock is . A) 14.0% B) 1

62、7.5% C) 16.5% D) 15.25% E) none of the above Answer: C Difficulty: Moderate Rationale: 4% + 1.25(14% - 4%) = 16.5%. 44. What is the intrinsic value of Sures stock today? A) $20.60 B) $20.00 C) $12.12 D) $22.00 E) none of the above Answer: A Difficulty: Difficult Rationale: k = .04 + 1.2

63、5 (.14 - .04); k = .165; .165 = (22 - P + 2) / P; .165P = 24 - P; 1.165P = 24 ; P = 20.60. 45. If Sures intrinsic value is $21.00 today, what must be its growth rate? A) 0.0% B) 10% C) 4% D) 6% E) 7% Answer: E Difficulty: Difficult Rationale: k = .04 + 1.25 (.14 - .04); k = .165; .165 = 2/21

64、 + g; g = .07 Use the following to answer questions 46-47: Torque Corporation is expected to pay a dividend of $1.00 in the upcoming year. Dividends are expected to grow at the rate of 6% per year. The risk-free rate of return is 5% and the expected return on the market portfolio is 13%. The stock

65、 of Torque Corporation has a beta of 1.2. 46. What is the return you should require on Torques stock? A) 12.0% B) 14.6% C) 15.6% D) 20% E) none of the above Answer: B Difficulty: Moderate Rationale: 5% + 1.2(13% - 5%) = 14.6%. 47. What is the intrinsic value of Torques stock? A) $14.29 B)

66、 $14.60 C) $12.33 D) $11.62 E) none of the above Answer: D Difficulty: Difficult Rationale: k = 5% + 1.2(13% - 5%) = 14.6%; P = 1 / (.146 - .06) = $11.62. 48. Midwest Airline is expected to pay a dividend of $7 in the coming year. Dividends are expected to grow at the rate of 15% per year. The risk-free rate of return is 6% and the expected return on the market portfolio is 14%. The stock of Midwest Airline has a beta of 3.00. The return you should require on the sto