QUESTIONS 80 THROUGH 93 RELATE TO EQUITY INVESTMENTS. (21 MINUTES)WHIC...

7.5.

C)

Question #82 of 120

Question ID: 1146413

The required rate of return used in the dividend discount model is least likely to be affected by a change in:

A)

the expected rate of inflation.

B)

the real risk-free rate of return.

the growth rate of earnings and dividends.

Question #83 of 120

Question ID: 1146409

High return on invested capital and high pricing power are most likely to be associated with an industry that has:

high capacity.

low barriers to entry.

high concentration.

Question #84 of 120

Question ID: 1146403

With regard to the implications of stock market efficiency for technical analysis and fundamental analysis, if market prices are:

weak-form efficient, technical analysis that depends only

on past trading data should be of limited or no value.

semistrong-form efficient, fundamental analysis using the

top-down approach should yield consistently superior

returns.

semistrong-form efficient, fundamental analysis using only

publicly available market information should generate

abnormal returns after considering risk and transaction

costs.

Question #85 of 120

Question ID: 1146414

The following data pertains to a firm's common stock:

The stock will pay no dividends for two years.

The dividend three years from now is expected to be $1.

Dividends are expected to grow at a 7% rate from that point onward.

If an investor requires a 17% return on this investment, how much will the investor be willing to pay for this stock now?

$6.24.

$7.31.

$8.26.

Question #86 of 120

Question ID: 1146418

A stock's price currently is $100. An analyst forecasts the following for the stock:

The normalized trailing price earnings (P/E) ratio will be 12×.

The stock is expected to pay a $5 dividend this coming year on projected earnings of $10 per share.

If the analyst were to buy and hold the stock for the year, the projected rate of return based on these forecasts is closest to:

15%.

20%.

25%.

Question #87 of 120

Question ID: 1146393

Which of the following statements about short sales is least accurate?

Proceeds from short sales cannot be withdrawn from the

account.

The short seller must pay the lender of the stock any

dividends paid by the company.

The short seller is required to replace the borrowed

securities within six months of a short sale.

Question #88 of 120

Question ID: 1146406

Which of the following firms' earnings are likely to exhibit the greatest degree of sensitivity to the business cycle?

Furniture producer with high fixed costs as a proportion of

total costs.

Entertainment producer with high variable costs as a

proportion of total costs.

Food and beverage producer with high fixed costs as a

Question #89 of 120

Question ID: 1146404

The type of share voting most likely to result in significant minority shareholders having an approximately proportional

representation on the board of directors is:

statutory voting.

weighted voting.

cumulative voting.

Question #90 of 120

Question ID: 1146398

Which of the following indexes is most likely to be rebalanced on a regular basis?

Price-weighted index.

Equal-weighted index.

Market-capitalization weighted index.

Question #91 of 120

Question ID: 1146410

Over the most recent period, Ladden Materials has seen slow growth, increased competition, and declining profitability in its

industry. The phase of the industry life cycle for Ladden's industry is most likely:

mature.

decline.

shakeout.

Question #92 of 120

Question ID: 1146399

Mike Bowers observes that during one year the return on the S&P 500 index is 20%. Recalculating the return on an equally

weighted basis, Bowers estimates that the index return is 15%. The difference in the two calculations of return

is best explained by:

large capitalization stocks outperforming small

capitalization stocks.

small capitalization stocks outperforming large

dividends on the stocks in the index.

Question #93 of 120

Question ID: 1146396

Which of the following is most accurate regarding the relationship between operational efficiency and informational efficiency?

Operational efficiency contributes to informational

efficiency.

Informational efficiency is independent of operational

There is a trade-off between operational efficiency and

informational efficiency.

Question #94 of 120

Question ID: 1146428