#1
Which of the following methods is commonly used to estimate the intrinsic value of a stock?
Dividend Discount Model (DDM)
Earnings Per Share (EPS)
Price-Earnings (P/E) Ratio
Return on Investment (ROI)
#2
Which financial ratio measures a company's ability to cover its short-term liabilities with its short-term assets?
Current ratio
Debt-to-Equity ratio
Return on Investment (ROI)
Price-Earnings (P/E) Ratio
#3
What does the term 'stock split' mean?
A decrease in the number of outstanding shares of a company
An increase in the par value of the company's shares
A redistribution of dividends to shareholders
An increase in the number of outstanding shares of a company
#4
What does the term 'yield' refer to in stock valuation?
The annual dividend income per share
The total market capitalization of a company
The earnings per share
The price per share
#5
What does the term 'market capitalization' represent?
The total value of all assets owned by a company
The total value of all outstanding shares of a company
The total revenue generated by a company
The total profit earned by a company
#6
What is the formula for calculating the Price-Earnings (P/E) Ratio of a stock?
Price per share / Earnings per share
Earnings per share / Price per share
Dividends per share / Earnings per share
Earnings per share / Dividends per share
#7
Which of the following factors does NOT typically influence a stock's price?
Market sentiment
Company's earnings
Supply and demand dynamics
Number of employees in the company
#8
What is the Gordon Growth Model (GGM) primarily used for in stock valuation?
To estimate future earnings growth
To calculate the present value of future dividends
To determine the optimal stock allocation in a portfolio
To assess the company's market capitalization
#9
What does the term 'book value' of a stock refer to?
The value of the stock at the time of purchase
The value of the company's assets minus its liabilities
The value of the stock in relation to the company's earnings
The market value of the stock on a given day
#10
Which of the following statements about common stock dividends is true?
Common stock dividends are fixed and guaranteed
Common stock dividends are paid out before preferred stock dividends
Common stock dividends are tax-deductible for the issuing company
Common stock dividends are paid out of the company's earnings at the discretion of the board
#11
What does the term 'beta' measure in the context of stock valuation?
The volatility of a stock relative to the market
The dividend yield of a stock
The company's total debt
The number of outstanding shares
#12
Which of the following is NOT a method of valuing a stock?
Dividend Discount Model (DDM)
Earnings Before Interest and Taxes (EBIT)
Discounted Cash Flow (DCF)
Price-Earnings (P/E) Ratio
#13
What does the Capital Asset Pricing Model (CAPM) help investors determine?
The optimal debt-to-equity ratio
The expected return on a stock
The optimal dividend payout ratio
The market capitalization of a company
#14
When valuing a stock using the Discounted Cash Flow (DCF) method, which of the following factors is considered in the calculation?
Historical stock prices
Current market sentiment
Future cash flows
Dividend yield
#15
What does the efficient market hypothesis (EMH) suggest regarding stock prices?
Stock prices always reflect all available information
Stock prices are determined solely by market sentiment
Stock prices are always undervalued
Stock prices are random and unpredictable
#16
What is the purpose of conducting a sensitivity analysis in stock valuation?
To assess the risk associated with investing in a particular stock
To estimate the potential impact of changing assumptions on the stock's valuation
To predict the future performance of the stock market
To determine the fair market value of a stock
#17
What is the formula for calculating the Weighted Average Cost of Capital (WACC)?
Cost of Equity + Cost of Debt
Cost of Equity - Cost of Debt
Cost of Equity * Cost of Debt
Cost of Equity / Cost of Debt
#18
Which of the following is a limitation of the Dividend Discount Model (DDM) in stock valuation?
It relies heavily on projected future cash flows
It does not account for changes in interest rates
It assumes dividends grow at a constant rate indefinitely
It cannot be applied to companies that do not pay dividends