Equity Quiz 1

vishnu.ftw
Good Student
Posts: 22
Joined: Wed Apr 03, 2013 5:01 pm

Equity Quiz 1

Postby vishnu.ftw » Thu Apr 18, 2013 6:10 pm

Question 16)Which of the following statement is least accurate for a Top Down equity analysis Approach?
Choose one answer.
a. Most valuation models, after top down analysis, recommends the required returns on equity, rather than average industry returns.
b. The goal of the top-down approach is to identify those companies in non-cyclical industries with the lowest p/e ratios.
c. An industry's prospects within the global business environment are a major determinant of how well individual firms in the industry perform.
The correct answer is The goal of the top-down approach is to identify those companies in non-cyclical industries with the lowest p/e ratios.
Incorrect
Marks for this submission: 0/1.

Wouldn't option B be the most accurate?

Question 18)A company currently has a required return on equity of 14% and an ROE of 12%. All else equal, if there is an increase in a firm’s dividend payout ratio, the stock's value will most likely:
Choose one answer.
a. Either increase or decrease.
b. Decrease.
c. Increase.
The correct answer is Increase.
Incorrect
Marks for this submission: 0/1.

If there is an increase in the payout ratio, then less dividend is reinvested, so growth rate decreases, which will lead to stock value decreasing. Therefore, how is option C correct?

vishnu.ftw
Good Student
Posts: 22
Joined: Wed Apr 03, 2013 5:01 pm

Equity Quiz 1

Postby vishnu.ftw » Tue Apr 30, 2013 2:41 pm

can someone explain pls


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