LOS a: Explain how the classic works on asset valuation by Graham and Dodd and John Burr Williams are reflected in modern techniques of equity valuation.

Q1. Although we often take modern security analysis for granted, the basic concept that a firm’s value could be determined by analyzing its income statement and balance sheet was not seriously advanced until about seventy years ago, when this approach was published by:

A)   Harry Markowitz.

B)   John Burr Williams.

C)   Benjamin Graham and David Dodd.

Q2. Modern security analysis is built on the concept of:

A)   constant growth of earnings and dividends.

B)   discounting future returns.

C)   speculation as a professional activity.

Q3. Which of the following models is credited to the work of John Burr Williams?

A)   Cash flow return on investment (CFROI).

B)   Dividend discount model (DDM).

C)   Free cash flow to equity (FCFE).

LOS a: Explain how the classic works on asset valuation by Graham and Dodd and John Burr Williams are reflected in modern techniques of equity valuation. fficeffice" />

Q1. Although we often take modern security analysis for granted, the basic concept that a firm’s value could be determined by analyzing its income statement and balance sheet was not seriously advanced until about seventy years ago, when this approach was published by:

A)   Harry Markowitz.

B)   John Burr Williams.

C)   Benjamin Graham and David Dodd.

Correct answer is C)

The concept that a firm’s value could be discerned by analysis of its financial statements was first advanced in Security Analysis, published in 1934 by Benjamin Graham and David Dodd.

Q2. Modern security analysis is built on the concept of:

A)   constant growth of earnings and dividends.

B)   discounting future returns.

C)   speculation as a professional activity.

Correct answer is B)

The concept that the value of an investment is equal to the discounted value of future returns is attributed to the work of Graham and Dodd, and John Burr Williams. This concept forms the basis for modern security analysis.

Q3. Which of the following models is credited to the work of John Burr Williams?

A)   Cash flow return on investment (CFROI).

B)   Dividend discount model (DDM).

C)   Free cash flow to equity (FCFE).

Correct answer is B)

John Burr Williams published The Theory of Investment Value in 1938, setting forth the theory that a value of a stock could be determined by discounting the value of future dividends.

[此贴子已经被作者于2009-3-5 9:19:08编辑过]

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