Q1. Which of the following has accounted for most of the variability in stock market returns over time?

A)   The interest expense margin of the market.

B)   The P/E ratio of the market.

C)   The EBITDA margin of the market.

Q2. 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)   earnings for firms and their level of capital investment, from which the retention ratio and hence dividend payout ratio can be derived.

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

答案和详解如下：

Q1. Which of the following has accounted for most of the variability in stock market returns over time?

A)   The interest expense margin of the market.

B)   The P/E ratio of the market.

C)   The EBITDA margin of the market.

Correct answer is B)

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 market’s return variability over time. The earnings, of which EBITDA and interest are components, do not influence the market return as much.

Q2. 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)   earnings for firms and their level of capital investment, from which the retention ratio and hence dividend payout ratio can be derived.

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

Correct answer is C)         

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.