Question 86

Donna Drake is interested in a stock that has expected dividends of $1.50 in one year, $1.75 in two years, and $2.05 in three years. Drake expects to sell the stock for $47.50 after three years. If Drake requires a 12% return on the stock, the price she is willing to pay today is closest to:

A)    $38.00.

B)   $34.40.

C)   $33.45.

D)   $52.30.

Which valuation measure is most likely more difficult to interpret when inflation has been high?

A)    Price/book value.

B)   Price/earnings.

C)   Price/sales.

D)   Price/cash flow.

After publishing a “sell” recommendation on Stardust Inc., Kelly Peterson, CFA, thoroughly reads and saves additional news articles that highlight problems at Stardust and dismisses articles that portray Stardust in a more positive light. Peterson is most likely exhibiting:

A)    overconfidence bias.

B)   escalation bias.

C)   confirmation bias.

D)   data mining bias.

The sustainable dividend growth rate (g) is most likely estimated as the:

A)    dividend payout ratio × return on equity.

B)   retention ratio × return on equity.

C)   retention ratio × return on assets.

D)   dividend payout ratio × return on assets.

Which of the following statements about securities markets is least accurate?

A)    Prices can be set in a continuous market either by dealers' bid-ask quotations or by an auction process.

B)   Underwriters provide issuers with origination, risk bearing, and distribution.

C)   Primary capital markets represent the major national markets that provide investors with liquidity and continuous price information.

D)   Well functioning capital markets provide information, liquidity, low transactions costs, and rapid price adjustments to new information.

[此贴子已经被作者于2008-11-7 17:24:58编辑过]

答案和详解如下！

Question 86

Donna Drake is interested in a stock that has expected dividends of $1.50 in one year, $1.75 in two years, and $2.05 in three years. Drake expects to sell the stock for $47.50 after three years. If Drake requires a 12% return on the stock, the price she is willing to pay today is closest to:

A)    $38.00.

B)   $34.40.

C)   $33.45.

D)   $52.30.

The correct answer was A) $38.00.

Find the present values of the cash flows and add them together.

N = 1; I/Y = 12; FV = 1.50; CPT → PV = 1.34

N = 2; I/Y = 12; FV = 1.75; CPT → PV = 1.40

N = 3; I/Y = 12; FV = 2.05 + 47.5 = 49.55; CPT → PV = 35.27

Stock Price = $1.34 + $1.40 + $35.27 = $38.01.

This question tested from Session 14, Reading 60, LOS b, (Part 2)

Question 87

Which valuation measure is most likely more difficult to interpret when inflation has been high?

A)    Price/book value.

B)   Price/earnings.

C)   Price/sales.

D)   Price/cash flow.

The correct answer was A ) Price/book value.

A disadvantage of the P/BV ratio is that high inflation can cause the book value of a company’s assets to be significantly less than their market value. Significant components of book value reflect historical costs, while earnings, sales, and cash flows reflect current prices.

This question tested from Session 14, Reading 61, LOS a, (Part 2)

Question 88

After publishing a “sell” recommendation on Stardust Inc., Kelly Peterson, CFA, thoroughly reads and saves additional news articles that highlight problems at Stardust and dismisses articles that portray Stardust in a more positive light. Peterson is most likely exhibiting:

A)    overconfidence bias.

B)   escalation bias.

C)   confirmation bias.

D)   data mining bias.

The correct answer was C) confirmation bias.

Confirmation bias is the tendency for people to seek out information that supports a decision they have made and to avoid or ignore new information that calls the decision into question. Overconfidence bias refers to the tendency for analysts of growth companies to be too confident in their forecasts of high earnings growth, overestimating the impact of good news while underestimating the impact of bad news. Escalation bias is exhibited by investors who tend to commit more funds to an investment that is declining in value. Data mining bias results when many statistical tests of the same data produce a certain number of statistically significant results simply by chance.

This question tested from Session 13, Reading 54, LOS d

Question 89

The sustainable dividend growth rate (g) is most likely estimated as the:

A)    dividend payout ratio × return on equity.

B)   retention ratio × return on equity.

C)   retention ratio × return on assets.

D)   dividend payout ratio × return on assets.

The correct answer was B ) retention ratio × return on equity.

The internal or sustainable growth rate (g) is the retention ratio (RR) multiplied by the return on equity (ROE).

This question tested from Session 14, Reading 60, LOS e

Question 90

Which of the following statements about securities markets is least accurate?

A)    Prices can be set in a continuous market either by dealers' bid-ask quotations or by an auction process.

B)   Underwriters provide issuers with origination, risk bearing, and distribution.

C)   Primary capital markets represent the major national markets that provide investors with liquidity and continuous price information.

D)   Well functioning capital markets provide information, liquidity, low transactions costs, and rapid price adjustments to new information.

The correct answer was C) Primary capital markets represent the major national markets that provide investors with liquidity and continuous price information.

Secondary markets provide liquidity and continuous price information. Primary capital markets relate to the sale of new issues of preferred and common stock. Most issues are distributed with the aid of an underwriter.

This question tested from Session 13, Reading 52, LOS a

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