Reading 24: Macroanalysis and Microvaluation of the Stock M direction, specific, change, market

tycoon

CFA Institute Area 6: Economics
Session 6: Economic Concepts for Asset Valuation in Portfolio Management
Reading 24: Macroanalysis and Microvaluation of the Stock Market
LOS e: Formulate and explain the "direction of change" and the "specific estimate" approaches to estimating an earnings multiplier for a stock market series.

[此贴子已经被作者于2008-9-16 17:50:52编辑过]

tycoon

Which of the following has accounted for most of the variability in stock market returns over time?

A) The EBITDA margin of the market.

B) The tax rate of the market.

C) The P/E ratio of the market.

D) The interest expense margin of the market.

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Answer and Explanation

Using an earnings multiplier approach, the return on the stock market is the P/E ratio times the earnings for the market. The P/E ratio has accounted for most of the stock markets return variability over time. The earnings, of which EBITDA, interest, and taxes are components, do not influence the market return as much.

tycoon

Which of the following is the best method of estimating the future dividend payout ratio for a stock market series? Estimate the:

A) dividend payout ratio using historical dividend payout ratios.

B) dividend payout ratio using autoregressive time series regression analysis.

C) dividend payment using historical dividends and then relate this to the estimated earnings.

D) earnings for firms and their level of capital investment, from which the retention ratio and hence dividend payout ratio can be derived.

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Answer and Explanation

The evidence is that firms target a stable dividend payment. Therefore, future dividends will be closely related to past dividends, and so to project the future dividend payout ratio, future dividends should be estimated from past dividends and then this amount should be related to estimated earnings.

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