Questions from General Investment

Q: You are considering two investment alternatives. The first is a stock

You are considering two investment alternatives. The first is a stock that pays quarterly dividends of $0.25 per share and is trading at $20 per share; you expect to sell the stock in six months for $...

Q: Briefly describe each of the following: a. Gross domestic

Briefly describe each of the following: a. Gross domestic product b. Leading indicators c. Money supply d. Producer prices

Q: What effect, if any, does inflation have on common stocks

What effect, if any, does inflation have on common stocks?

Q: What is industry analysis, and why is it important?

What is industry analysis, and why is it important?

Q: What is the purpose of stock valuation? What role does intrinsic

What is the purpose of stock valuation? What role does intrinsic value play in the stock valuation process?

Q: Briefly describe the price-to-sales ratio, and explain

Briefly describe the price-to-sales ratio, and explain how it is used to value stocks. Why not just use the P/E multiple? How does the P/S ratio differ from the P/BV measure?

Q: Are the firm’s expected future earnings important in determining a stock’s investment

Are the firm’s expected future earnings important in determining a stock’s investment merits? Discuss how stock valuation relies on these and other future estimates.

Q: How can a company’s growth prospects affect its P/E multiple

How can a company’s growth prospects affect its P/E multiple? How about the amount of debt a firm uses? Are there other factors that affect a firm’s P/E ratio?

Q: What is the market multiple and how can it help in evaluating

What is the market multiple and how can it help in evaluating a stock’s P/E ratio? Is a stock’s relative P/E the same thing as the market multiple? Explain.

Q: How can valuation help you tell whether a security is a worthwhile

How can valuation help you tell whether a security is a worthwhile investment? What role does the required return play in this process? Would you invest in a stock if it offered a rate of return that...