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13 Cards in this Set
- Front
- Back
How will the price of a stock be affected if the dividend growth rate is decreased?
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decrease
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Which one of the following will increase the current residual income of a firm?
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a decrease in the required return on the firm's equity
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Which one of the following models can be used to value the stock of a firm that maintains a one hundred percent retention ratio?
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residual income
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residual income
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a method for valuing stock in a company that does not pay dividends.
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clean surplus relationship
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an accounting relationship in which earnings minus dividends equals the change in book value per share
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Economic Value Added
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a financial performance measure based on the difference between a firm's actual earnings and recquired earnings
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which have the same meaning as the term, Economic value added
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I. Abnormal earnings
II. Residual income III. value created by a firm in period t IV. EPSt-Bt-1 x k |
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Which one of the following correctly expresses the clean surplus relationship?
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The change in book value per share is equal to earnings per share minus dividends.
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Which one of the following statements related to the price-earnings (P/E) ratio is correct?
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The earnings yield is the inverse of the P/E ratio.
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Which one of the following is used as an indicator that a firm has good-quality earnings?
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cash flow per share that exceeds earnings per share
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Which one of the following is the most common definition of cash flow as used in the price-cash flow ratio?
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net income + Depr.
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The price-sales ratio helps measure the ability of a firm to generate:
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Revenue growth
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You would like to know the value of a firm's equity today in relation to the cost of that equity.
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price-book
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