21．h of the following statements concerning security valuation is FALSE?

A)   Accounting methods may differ substantially between countries.

B)   To value any security, you need to know the projected cash flows, their timing, and the required rate of return.

C)   If the return on new investments is less than the return the firm is earning on its existing investments, the firm is considered a growth firm.

D)   The business risk component of a country's risk premium is a function of the variability of economic activity in the country and the average operating leverage used by firms in the country.

22．Which of the following statements concerning security valuation is FALSE?

A)   The liquidity risk of countries refers to the size and activity of the country's capital markets.

B)   ROA times one minus the dividend payout ratio is the firm's sustainable growth rate.

C)   If the firm's payout ratio is 40%, has a required return of 12%, and a dividend growth rate of 7%, the firm's price to earnings (P/E) ratio should be 8.

D)   The nominal risk-free rate can be estimated by adding the real risk-free rate to the expected inflation premium.

23．Which of the following statements concerning security valuation is FALSE?

A)   The best way to value a company with high and unsustainable growth that exceeds the required return is to use the temporary supernormal growth (multistage) model.

B)   The best way to value a company with no current dividend but who is expected to pay dividends in three years is to use the temporary supernormal growth (multistage) model.

C)   If a company has a zero retention rate, the firm's price to earnings (P/E) ratio will be one over the firm's required rate of return.

D)   A firm with a $1.50 dividend last year, a dividend payout ratio of 40%, a return on equity of 12%, and a 15% required return is worth $18.24.

24．When a company’s return on equity (ROE) is 12% and the dividend payout ratio is 60%, what is the implied sustainable growth rate of earnings and dividends?

A)   4.8%.

B)   4.0%.

C)   6.0%.

D)   7.8%.

25．Assuming a firm does not currently have excessive debt, a decrease in leverage will most likely cause the firm’s stock price to:

A)   increase.

B)   remain the same.

C)   decrease.

D)   equal 0.

26．If a company can convince its suppliers to offer better terms on their products leading to a higher profit margin, the return on equity (ROE) will most likely:

A)   decrease and the stock price will increase.

B)   decrease and the stock price will decline.

C)   increase and the stock price will increase

D)   increase and the stock price will decline.

答案和详解如下：

21．h of the following statements concerning security valuation is FALSE?

A)   Accounting methods may differ substantially between countries.

B)   To value any security, you need to know the projected cash flows, their timing, and the required rate of return.

C)   If the return on new investments is less than the return the firm is earning on its existing investments, the firm is considered a growth firm.

D)   The business risk component of a country's risk premium is a function of the variability of economic activity in the country and the average operating leverage used by firms in the country.

The correct answer was C)

If the return on new investments is greater than the return the firm is earning on its existing investments, the firm is considered to be a growth firm.

22．Which of the following statements concerning security valuation is FALSE?

A)   The liquidity risk of countries refers to the size and activity of the country's capital markets.

B)   ROA times one minus the dividend payout ratio is the firm's sustainable growth rate.

C)   If the firm's payout ratio is 40%, has a required return of 12%, and a dividend growth rate of 7%, the firm's price to earnings (P/E) ratio should be 8.

D)   The nominal risk-free rate can be estimated by adding the real risk-free rate to the expected inflation premium.

The correct answer was B)

One minus the dividend payout ratio is the firm’s retention rate. The sustainable growth rate is the firm’s return on equity (ROE) times the retention rate.

23．Which of the following statements concerning security valuation is FALSE?

A)   The best way to value a company with high and unsustainable growth that exceeds the required return is to use the temporary supernormal growth (multistage) model.

B)   The best way to value a company with no current dividend but who is expected to pay dividends in three years is to use the temporary supernormal growth (multistage) model.

C)   If a company has a zero retention rate, the firm's price to earnings (P/E) ratio will be one over the firm's required rate of return.

D)   A firm with a $1.50 dividend last year, a dividend payout ratio of 40%, a return on equity of 12%, and a 15% required return is worth $18.24.

The correct answer was D)

A firm with a $1.50 dividend last year, a dividend payout ratio of 40%, a return on new investment of 12%, and a 15% required return is worth $20.64. The growth rate is (1 – 0.40) × 0.12 = 7.2%. The expected dividend is then ($1.50)(1.072) = $1.61. The value is then (1.61)/(0.15 – 0.072) = $20.64.

24．When a company’s return on equity (ROE) is 12% and the dividend payout ratio is 60%, what is the implied sustainable growth rate of earnings and dividends?

A)   4.8%.

B)   4.0%.

C)   6.0%.

D)   7.8%.

The correct answer was A)

g = ROE × retention ratio = ROE × (1 – payout ratio) = 12 (0.4) = 4.8%

25．Assuming a firm does not currently have excessive debt, a decrease in leverage will most likely cause the firm’s stock price to:

A)   increase.

B)   remain the same.

C)   decrease.

D)   equal 0.

The correct answer was C)

The firm’s stock price will most likely fall for two reasons: 1) loss of the debt tax shelter; 2) decrease in the leverage multiplier, A/E, causing ROE to decline.

26．If a company can convince its suppliers to offer better terms on their products leading to a higher profit margin, the return on equity (ROE) will most likely:

A)   decrease and the stock price will increase.

B)   decrease and the stock price will decline.

C)   increase and the stock price will increase

D)   increase and the stock price will decline.

The correct answer was C)

Better supplier terms lead to increased profitability. Better profit margins lead to an increase in ROE. This leads to an increase in the dividend growth rate. The difference between the cost of equity and the dividend growth rate will decline, causing the stock price to increase.