Questions from General Investment

Q: In this chapter, we examined nine stock valuation procedures:

In this chapter, we examined nine stock valuation procedures: • Zero-growth DVM • Constant-growth DVM • Variable-growth DVM • Free cash flow to equity approach • Expected return (IRR) approach • P/E a...

Q: Explain the role that the future plays in stock valuation. Why

Explain the role that the future plays in stock valuation. Why not base the valuation solely on historical information? Explain how a stock’s intrinsic value relates to its required return. Illustrate...

Q: Assume an investor uses the constant-growth DVM to value a

Assume an investor uses the constant-growth DVM to value a stock. Listed are various situations that could affect the computed value of a stock. Look at each one of these individually and indicate whe...

Q: Much has been written about the concept of an efficient market.

Much has been written about the concept of an efficient market. It’s probably safe to say that some of your classmates believe the markets are efficient and others believe they are not. Have a debate...

Q: Briefly define each of the following, and note the conditions that

Briefly define each of the following, and note the conditions that would suggest the market is technically strong. a. Breadth of the market b. Short interest c. Relative strength index d. Theory of co...

Q: Each year the financial media publishes lists of the top-performing

Each year the financial media publishes lists of the top-performing mutual fund managers. And every year there are some fund managers who earn much higher returns than the market average, and in some...

Q: Erin McQueen purchased 50 shares of BMW, a German stock traded

Erin McQueen purchased 50 shares of BMW, a German stock traded on the Frankfurt Exchange, for €85.5 (euros) per share exactly one year ago when the exchange rate was 1.10$/€ (i.e, €1 was worth $1.10)....

Q: Calculate the following. a. The present value of $

Calculate the following. a. The present value of $500 to be received four years from now, using an 11% discount rate. b. The present value of the following end-of-year income streams, using a 9% disc...

Q: If small stocks outperform large stocks, does that violate market efficiency

If small stocks outperform large stocks, does that violate market efficiency? If yes, why? If not, what else would have to be true to conclude that the pattern did violate market efficiency?

Q: Suppose you look back over the past 10 years and identify firms

Suppose you look back over the past 10 years and identify firms that have increased dividends every year. You notice that these stocks outperformed the broader market over the decade too. Does this vi...