Reading 60: An Introduction to Security Valuation: Part II

答案和详解如下：

1．ssuming past investments are stable and earnings are calculated to allow for maintenance of past earnings power, the firm’s expected dividend growth rate can be estimated by its:

A)   risk premium.

B)   earnings to price ratio.

C)   price to earnings ratio.

D)   sustainable growth rate.

The correct answer was D)

Assuming past investments are stable and earnings are calculated to allow for maintenance of past earnings power, then the firm’s expected dividend growth rate (g) can be defined as the firm’s earnings plowback or retention rate (RR) times the return on the equity (ROE) portion of new investment. RR is equal to 1 minus the dividend payout ratio, and ROE equals profit margin times total asset turnover times financial leverage. This growth rate is also called the sustainable growth rate.

2． its latest annual report, a company reported the following:

Based on the sustainable growth model, the most likely forecast of the company’s future earnings growth rate is:

A)   12%.

B)   8%.

C)   4%.

D)   6%.

The correct answer was A)

g = (RR)(ROE)

RR = 1 - dividend payout ratio = 1 - 0.4 = 0.6

ROE = NI / Total Equity = 1,000,000 / 5,000,000 = 1/5 = 0.2
Note: This is the "simple" calculation of ROE. Since we are only given these inputs, these are what you should use. Also, if given beginning and ending equity balances, use the average in the denominator.

g = (0.6)(0.2) = .12 or 12 %

3．l else equal, the price-to-earnings (P/E) ratio of a stable firm will increase if the:

A)   dividend payout is decreased.

B)   required rate of return is increased.

C)   long-term growth rate is decreased.

D)   ROE is increased.

The correct answer was D)

The increase in growth rate will increase the P/E ratio of a stable firm and growth rate can be calculated by the formula g = ROE * retention ratio. All else being equal an increase in ROE will therefore increase the P/E ratio. Note that decreasing the dividend payout ratio, increasing the required rate of return, and decreasing the long term growth rate will all serve to decrease the P/E ratio.

4． the return on equity for a firm is 15% and the retention rate is 40%, the firm’s sustainable growth rate is closest to:

A)   15%.

B)   9%.

C)   6%.

D)   40%.

The correct answer was C)

g = (RR)(ROE)

= (0.15)(0.40)

= 0.06 or 6%

5．ven the following information, compute the implied dividend growth rate.

  Profit margin = 10.0%

  Total asset turnover = 2.0 times

  Financial leverage = 1.5 times

  Dividend payout ratio = 40.0%

A)   18.0%.

B)   12.0%.

C)   30.0%.

D)   4.5%.

The correct answer was A)

Retention ratio equals 1 – 0.40, or 0.60.
Return on equity equals (10.0%)(2.0)(1.5) = 30.0%.
Dividend growth rate equals (0.60)(30.0%) = 18.0%