答案和详解如下： 6.l else equal, an increase in a company’s growth rate will most likely cause its P/E ratio to: A) either increase or decrease. B) not change. C) decrease. D) increase. The correct answer was D) Increase in g: As g increases, the spread between ke and g, or the P/E denominator, will decrease, and the P/E ratio will increase.
7.sume a company's ROE is 14% and the required return on equity is 13%. All else remaining equal, if there is a decrease in a firm’s retention rate, a stock’s value as estimated by the constant growth dividend discount model (DDM) will most likely:
A) either increase or decrease. B) decrease. C) not change. D) increase. The correct answer was B) Increase in dividend payout/reduction in earnings retention. In this case, reduction in earnings retention will likely lower the P/E ratio. The logic is as follows: Because earnings retention impacts both the numerator (dividend payout) and denominator (g) of the P/E ratio, the impact of a change in earnings retention depends upon the relationship of ke and ROE. If the company is earning a higher rate on new projects than the rate required by the market (ROE > ke), investors will likely prefer that the company retain more earnings. Since an increase in the dividend payout would decrease earnings retention, the P/E ratio would fall, as investors will value the company lower if it retains a lower percentage of earnings.
8.l else equal, if a firm’s return on equity (ROE) increases, the stock’s value as estimated by the constant growth dividend discount model (DDM) will most likely:
A) not change. B) decrease. C) increase. D) either increase or decrease. The correct answer was C) Increase in ROE: ROE is a component of g. As g increases, the spread between ke and g, or the P/E denominator, will decrease, and the P/E ratio will increase.
9.company currently has a required return on equity of 14 percent and an ROE of 12 percent. All else equal, if there is an increase in a firm’s dividend payout ratio, the stock's value will most likely:
A) decrease. B) not change. C) either increase or decrease. D) increase. The correct answer was D) Increase in dividend payout/reduction in earnings retention. In this case, an increase in the dividend payout will likely increase the P/E ratio because a decrease in earnings retention will likely increase the P/E ratio. The logic is as follows: Because earnings retention impacts both the numerator (dividend payout) and denominator (g) of the P/E ratio, the impact of a change in earnings retention depends upon the relationship of ke and ROE. If the company is earning a lower rate on new projects than the rate required by the market (ROE < ke), investors will likely prefer that the company pay out earnings rather than investing in lower-yield projects. Since an increase in the dividend payout would decrease earnings retention, the P/E ratio would rise, as investors will value the company higher if it retains a lower percentage of earnings.
10.analyst gathered the following information for a company:
Risk-free rate = 6.75%
Expected market return = 15.00%
Beta = 1.30
Dividend payout ratio = 55%
Profit margin = 10.0%
Total asset turnover = 0.75
Assets to equity ratio = 2.00 What is the firm’s sustainable growth rate? A) Tax rate needed to determine answer. B) 6.75% C) 15.00% D) 16.50% The correct answer was B) Sustainable Growth (g) = ROE x Earnings Retention Rate, or ROE * (1 - Dividend Payout) ROE = Profit Margin x Total Asset Turnover x Financial Leverage Multiplier = .10 x .75 x 2 = .15 g = 0.15 x 0.45 = .0675, or 6.75%. | 
发表于 2008-4-10 17:30
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