If a firm takes steps that increase its expected future ROE, does this necessarily meanthat the stock price will also increase? Explain.

1. Which form of market efficiency is the best among weak, semi strong and strong? 2. Is stock market efficient? Give logic in favour of your answer

The beta risk of a share reflects the sensitivity of cash flow, earnings, and the share price to what sort of movements? Select one: a. Industry-wide market movements. b. Capital market movements. c. Economy-wide market movements. d. All of these.

Based on the results from Fama and French, does it matter for the Efficient Markets Hypothesis if value stocks are riskier than growth stocks, or if growth stocks are riskier than value stocks? Why or why not?

How will the change in required return influence the price of a stock? How will the dividend growth rate influence the price of a stock?

Which of the following is needed to calculate a firm’s WACC?    A. the cost of carrying inventory    B. the amount of capital necessary to make the investment    C. the cost of preferred stock    D. the probability distribution of expected returns E. both b and c

АВС XYZ Discount rate (r) Historical growth rate of 0.015+2*0.085=0.185 0.015+1.5*0.085=0.142 (58/30)^(1/30)-1=0.022 Not available. Cannot dividends compute without dividends Sustainable growth rate Fundamental value using dividend growth model with the historical growth rate Fundamental value using the 467*(1+0.185)/(0.185-0.045) dividend growth model with =3953 the sustainable growth rate Fundamental value using residual income growth 0.15*(1-0.7)=0.045 467*(1+0.185)/(0.185-0.022) 0.2*(1-0)=0.2 Not available. Cannot =3395 compute without dividends Not available. Cannot compute without dividends 80*(1+0.022)-(550*0.022)/(0. 185-0.022)=427.36 Not available. Cannot compute without dividends model with the historical growth rate Fundamental value using the 80*(1+0.045)-(550*0.045)/(0. residual income growth 12*(1+0.2)-(100*0.2)/(0.142- 0.2)=96.5 185-0.045)=420.35 model with the sustainable growth rate

Could the dividend growth approach be appliedif the growth rate were not constant? How?

Which of the following is the best reason why the price-earnings method is often used by investors to estimate the fair price of a stock? a) Because the earning multiples are easily found in online financial databases. b) Earnings per share is a known amount that is related to the payment of future dividends. c) Because the price-earnings method gives the same answer as the constant growth method and is easier to compute. d) The price-earnings method has been shown to provide the most accurate price estimate.

please answer both. If a stock's fair return increases, what will happen to the stock's value?   A. It will increase.   B. It will not change.   C. It will decrease.     If the market risk premium rises, what will happen to the stock's price?   A. It will not change.   B. It will increase.   C. It will decrease.