Reading 41: Discounted Dividend Valuation- LOS j～ Q1-7 company, companies, collected, following

wzaina

 

LOS j: Explain the assumptions and justify the selection of the two-stage DDM, the H-model, the three-stage DDM, or spreadsheet modeling to value a company’s common shares, given the characteristics of the company being valued.

Q1. An analyst has collected the following data on two companies:

< > td>	Middle Hickory Co.	Lower Elm Inc.
FCFE	Negative	Positive and growing
Capital investment	Significant	Decreasing

Which dividend-discount model is the best option for valuing the two companies?

                Middle Hickory         Lower Elm

 

A)      Two-stage                      Gordon Growth

B)      Three-stage                  Two-stage

C)     Gordon Growth               Three-stage

 

Q2. Which of the following models would be most appropriate for a firm that is expected to grow at 8% for the next three years, and at 6% thereafter?

A)   The H-model.

B)   A two-stage model.

C)   The Gordon growth model.

 

Q3. The most appropriate model for analyzing a profitable high-tech firm is the:

A)   three-stage dividend discount model (DDM).

B)   zero growth cash flow model.

C)   H-model.

 

 

Q4. The three-stage dividend discount model (DDM) allows for an initial period of:

A)   high growth, a transitional period of stable growth and a final declining growth phase.

B)   stable growth, a transitional period of high growth and a final declining growth phase.

C)   high growth, a transitional period of declining growth and a final stable growth phase.

 

Q5. Which of the following dividend discount models assumes a high growth rate during the initial stage, followed by a linear decline to a lower stable growth rate?

A)   Three-stage dividend discount model.

B)   H model.

C)   Gordon growth model.

 

Q6. What is the difference between a standard two-stage growth model and the H-model?

A)   The H-model assumes a terminal value, while the standard two-stage model does not.

B)   The H-model assumes that earnings will dip in the middle of each stage and return to the previous rate by the period's end.

C)   In the standard two-stage model, a fixed rate of growth is assumed for each stage, while the H-model assumes a linearly declining rate of growth in one stage.

 

Q7. Which of the following models would be most appropriate for a firm that is expected to grow at an initial rate of 10%, declining steadily to 6% over a period of five years, and to remain steady at 6% thereafter?

A)   The H-model.

B)   The Gordon growth model.

C)   A two-stage model.

[此贴子已经被作者于2009-3-6 16:33:40编辑过]

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QUOTE:

以下是引用wzaina在2009-3-6 16:32:00的发言：
 

LOS j: Explain the assumptions and justify the selection of the two-stage DDM, the H-model, the three-stage DDM, or spreadsheet modeling to value a company’s common shares, given the characteristics of the company being valued.

Q1. An analyst has collected the following data on two companies:

< > td>	Middle Hickory Co.	Lower Elm Inc.
FCFE	Negative	Positive and growing
Capital investment	Significant	Decreasing

Which dividend-discount model is the best option for valuing the two companies?

                Middle Hickory         Lower Elm

 

A)      Two-stage                      Gordon Growth

B)      Three-stage                  Two-stage

C)     Gordon Growth               Three-stage

 

Q2. Which of the following models would be most appropriate for a firm that is expected to grow at 8% for the next three years, and at 6% thereafter?

A)   The H-model.

B)   A two-stage model.

C)   The Gordon growth model.

 

Q3. The most appropriate model for analyzing a profitable high-tech firm is the:

A)   three-stage dividend discount model (DDM).

B)   zero growth cash flow model.

C)   H-model.

 

 

Q4. The three-stage dividend discount model (DDM) allows for an initial period of:

A)   high growth, a transitional period of stable growth and a final declining growth phase.

B)   stable growth, a transitional period of high growth and a final declining growth phase.

C)   high growth, a transitional period of declining growth and a final stable growth phase.

 

Q5. Which of the following dividend discount models assumes a high growth rate during the initial stage, followed by a linear decline to a lower stable growth rate?

A)   Three-stage dividend discount model.

B)   H model.

C)   Gordon growth model.

 

Q6. What is the difference between a standard two-stage growth model and the H-model?

A)   The H-model assumes a terminal value, while the standard two-stage model does not.

B)   The H-model assumes that earnings will dip in the middle of each stage and return to the previous rate by the period's end.

C)   In the standard two-stage model, a fixed rate of growth is assumed for each stage, while the H-model assumes a linearly declining rate of growth in one stage.

 

Q7. Which of the following models would be most appropriate for a firm that is expected to grow at an initial rate of 10%, declining steadily to 6% over a period of five years, and to remain steady at 6% thereafter?

A)   The H-model.

B)   The Gordon growth model.

C)   A two-stage model.

[此贴子已经被作者于2009-3-6 16:33:40编辑过]

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