Reading 60: An Introduction to Security Valuation: Part II

答案和详解如下：

16.company’s payout ratio is 0.45 and its expected return on equity (ROE) is 23%. What is the company’s implied growth rate in dividends?

A)   10.35%

B)   12.65%

C)   4.16%

D)   8.50%.

The correct answer was B)

Growth Rate = (ROE)(1 – Payout Ratio) = (0.23)(0.55) = 12.65%

17. Corp.’s return on equity (ROE) is 19.5% and its dividend payout rate is 45%. What is the company’s implied dividend growth rate?

A)   19.5%.

B)   55%.

C)   10.73%.

D)   8.78%.

The correct answer was C)

g = (ROE)(RR)

g = (19.5)(1 - 0.45)

g = (0.195)(0.55)

= 0.1073 or 10.73%

18.ch of the following is NOT an assumption of the constant growth dividend discount model (DDM)?

A)   The growth rate of the firm is higher than the overall growth rate of the economy.

B)   ROE is constant.

C)   Dividend payout is constant.

D)   Required rate of return k is greater than the dividend growth rate g.

The correct answer was A)

Other assumptions of the DDM are: dividends grow at a constant rate and the growth rate continues for an infinite period.

19.ch of the following statements concerning security valuation is FALSE?

A)   The top-down approach to security valuation starts with an examination of the economy of each country.

B)   A common stock with no growth in the dividend is valued like preferred stock.

C)   The retention rate in the dividend discount model is one minus the growth rate.

D)   The dividend discount model assumes the firm pays dividends.

The correct answer was C)

The retention rate is one minus the dividend payout ratio.

20．ich of the following statements concerning security valuation is FALSE?

A)   An investor may determine the required rate of return for the dividend discount model (DDM) by adding a risk premium to the nominal risk-free rate.

B)   In the dividend discount model (DDM), the value of the firm is the present value of all future dividends.

C)   An investor can estimate the growth rate for the dividend discount model (DDM) by multiplying the firm's return on equity (ROE) by the firm's dividend payout ratio.

D)   Business risk is a component of a country's risk premium.

The correct answer was C)

An investor can estimate the growth rate for the DDM by multiplying the firm’s ROE by the retention rate, which is one minus the firm’s dividend payout ratio.