文档介绍：CHAPTER 8
Stock Valuation
II. CONCEPTS
VALUATION OF ZERO GROWTH STOCK
c 26. The James River Co. pays an annual dividend of $ per share on its common stock.
This dividend amount has been constant for the past 15 years and is expected to remain
constant. Given this, one share of James River Co. stock:
a. is basically worthless as it offers no growth potential.
b. has a market value equal to the present value of $ paid one year from today.
c. is valued as if the dividend paid is a perpetuity.
d. is valued with an assumed growth rate of 3 percent.
e. has a market value of $.
VALUATION OF ZERO GROWTH STOCK
e 27. The common stock of the Kenwith Co. pays a constant annual dividend. Thus, the market price of Kenwith stock will:
a. also remain constant.
b. increase over time.
c. decrease over time.
d. increase when the market rate of return increases.
e. decrease when the market rate of return increases.
DIVIDEND YIELD VS. CAPITAL GAINS YIELD
c 28. The Koster Co. currently pays an annual dividend of $ and plans on increasing that amount by 5 percent each year. The Keyser Co. currently pays an annual dividend of $ and plans on increasing their dividend by 3 percent annually. Given this, it can be stated with certainty that the _____ of the Koster Co. stock is greater than the _____ of the Keyser Co. stock.
a. market price; market price
b. dividend yield; dividend yield
c. rate of capital gain; rate of capital gain
d. total return; total return
e. capital gains; dividend yield
DIVIDEND GROWTH MODEL
d 29. The dividend growth model:
I. assumes that dividends increase at a constant rate forever.
II. can be used to compute a stock price at any point of time.
III. states that the market price of a stock is only affected by the amount of the dividend.
IV. considers capital gains but ignores the dividend yield.
a. I only
b. II only
c. IIIand IV only
d. I and II only
e. I, II, and III only