Which of the following is a true statement regarding publicly tradedstocks and bonds?O A share of common stock is generally easier to value in practice than a bond.O Market interest rates and bond prices move in the same direction.O The constant dividend growth model can be used to value stocks only if the dividend growthrate remains constant.O The price of a stock is greater than the present value of all future dividends.

The constant dividends model is a stock valuation model that assumes that the dividends of a company…

Answered: Which of the following is a true…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Selling shares of stock for more than you originally paid is called modern portfolio theory. leverage. current income. capital gain.
Which of the following statements is CORRECT? a. The constant growth model takes into consideration the capital gains investors expect to earn on a stock. b. Two firms with the same expected dividend and growth rate must also have the same stock price. c. It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant. d. If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%. e. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. provide an explanation for the choice.
Do solve all parts A. What risk premium do you use? Why? B. Why is the geometric mean lower than the arithmetic mean for both bonds and bills? C. If you had to use a risk premium with the longer periods, what biases will the investor have?
Which of the following statements is CORRECT? a. Two firms with the same expected dividend and growth rates must also have the same stock price. b. It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant. c. If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%. d. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. e. The constant growth model takes into consideration the capital gains investors expect to earn on a stock.
All stocks pay dividends, and therefore one can count on them having a dividend yield. OA. True OB. False
Which of the following statements is true? a. Growth stocks tend to have low P/E ratios and high Market-to-book ratios b. Growth stocks tend to have low dividend yields and high P/E ratios c. Value stocks tend to have high P/E ratios and high Market-to-Book ratios d. (b) and (c) are both true
6. What are the realized returns for the stock market, for Small Companies, Large Companies; long term Bonds, Long Term Gov Bonds, and US T Bills? What investment portfolio would select (do not include names of mutual funds or stocks, just overall types of investments.)?
What effect do increasing inflation expectations have on the required returns of investors in common stock?
Which statement is false? O A. As the term of a bond approaches zero, the price approaches kar. O B. For corporate and government bonds, the coupon payments amortize the princi OC. Overall, bond prices are less volatile than stock prices. O D. The coupon on a bond is expressed as a percentage of face value. O E. Corporate bonds can be bought and sold in the secondary market. Reset Selection
Detail explanation of all ques....
“The constant-growth model should not be used with just any stock.” Explain with reasons the assumptions used by analysts when using the constant- growth dividend model.
Which of the following will increase the price of a stock? Group of answer choices: A. Decrease in the required rate of return B. Decrease in the dividend growth rate C. Delay in the payment of dividends D. Decrease in earnings growth

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