#1
Which of the following methods is used to value a stock based on its expected future cash flows?
Dividend Discount Model (DDM)
Price-Earnings Ratio (P/E)
Book Value
Return on Investment (ROI)
#2
What does the price-earnings ratio (P/E ratio) indicate about a stock?
The company's total debt
The company's earnings relative to its stock price
The company's market capitalization
The company's dividend yield
#3
Which of the following factors affects the intrinsic value of a stock according to the Dividend Discount Model (DDM)?
Market sentiment
Current dividend payout ratio
Expected future dividends
Stock price volatility
#4
What is the formula to calculate the Dividend Discount Model (DDM) for a perpetuity?
D0 / (r - g)
D0 / r
D0 * (1 + g) / r
D0 * r / (1 + g)
#5
What is the formula for the Gordon Growth Model (GGM)?
P = D0 / (r - g)
P = D0 * r / (1 + g)
P = D0 * (1 + g) / r
P = D0 / r
#6
What does the Gordon Growth Model (GGM) focus on when valuing a stock?
Current market trends
Future dividends
Historical prices
Intrinsic value
#7
If a company has a high dividend payout ratio, what does this indicate?
The company is retaining most of its earnings
The company is not profitable
The company is paying out a large portion of its earnings as dividends
The company is undervalued
#8
Which financial statement provides information about a company's dividends paid?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Retained Earnings
#9
What does a high dividend yield suggest about a stock?
The stock is overvalued
The stock is undervalued
The stock has low liquidity
The stock has high volatility
#10
What does the term 'ex-dividend date' refer to?
The date when dividends are declared by the company
The date when dividends are paid to shareholders
The date when shareholders are entitled to receive dividends
The date when dividends are reinvested into the company
#11
Which of the following factors affects the Gordon Growth Model (GGM) the most?
Expected dividend growth rate
Current stock price
Market capitalization
Interest rates
#12
What is the significance of the Dividend Discount Model (DDM) in stock valuation?
It accounts for all potential future cash flows of a stock
It focuses solely on the current stock price
It evaluates the book value of a company
It considers historical dividend payments
#13
Which of the following is NOT considered a method for stock valuation?
Discounted Cash Flow (DCF) analysis
Price-Earnings Ratio (P/E ratio)
Dividend Discount Model (DDM)
Inventory Valuation
#14
What does the Dividend Discount Model (DDM) assume about dividend growth?
It assumes a constant dividend growth rate
It assumes dividends will decrease over time
It assumes dividends will fluctuate unpredictably
It assumes dividends will increase exponentially
#15
In stock valuation, what does the term 'terminal value' refer to?
The final dividend payment of a stock
The long-term sustainable growth rate of a company
The current market price of a stock
The future value of a stock after a certain period