Financial Management - Study Mode

[#621] Method of stock valuation which is multiple of earning per share, book value and net income is classified as
Correct Answer

(C) market multiple analysis

Explanation

Solution: Method of stock valuation which is multiple of earning per share, book value and net income is classified as market multiple analysis. A market multiples analysis is a financial modeling method of assigning a value to assets or to a business.

[#622] Preferred dividend is Rs 50 and required rate of return is 2.5% then value of preferred stock would be
Correct Answer

(C) Rs 2,000.00

Explanation

Solution: Preferred stock = Preferred dividend / Required rate of return * 100 = 50 / 2.5 * 100 = Rs. 2000.

[#623] In expected rate of return for constant growth, stock price must grow according to an expected rate and
Correct Answer

(A) at same price

Explanation

Solution: In expected rate of return for constant growth, stock price must grow according to an expected rate and at same price. The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR).

[#624] Dividend present value for period of non-constant growth in addition with horizon value is used to calculate
Correct Answer

(B) stock intrinsic value

Explanation

Solution: Dividend present value for period of non-constant growth in addition with horizon value is used to calculate stock intrinsic value. Intrinsic value refers to an investor's perception of the inherent value of an asset, such as a company, stock, option, or real estate. Knowing an investment's intrinsic value is useful for value investors who have a goal of buying stocks and other investments at a discount to this amount.

[#625] In case of Gordon's Model, the MP for zero payout is zero. It means that:
Correct Answer

(C) Investors are not ready to offer any price