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- Which of the followings is not one of the components of ROE under the Du Pont analysis/identity? Select one:a. Profitabilityb. Efficiencyc. Liquidityd. Equity multiplierA situation in which one focuses on individual decisions rather than looking at them in the context of related decisions. Please match the description with the corresponding term below. A.Equity Premium B.Statistically Independent C.Equity Premium Puzzle D.Narrow Framingfor the attached comprehensive problem, please make statement of equity (SCE)
- List methods used to value equity instrumentsPlease draw the Capital Market Line and the Security Market Line. Please write down their function forms and explain the differences between these two lines.Describe each of the following methods for estimating the cost of equity: (a) the CAPM, (b) DCF,and (c) the bond-yield-plus-risk-premium.Where can you obtain inputs for each of thesemethods, and how accurate are estimates basedon each procedure? Can you state categoricallythat one method is better than the others, or doesthe “best” method depend on the circumstances?
- What is the strength of equity method?The required rate of return on equity is the most appropriate discount rate to use when applying a ______ valuation model. A. FCFE B. DDM C. FCEF or DDM D. P/E E. FCEFExplain the relationship between return on equity (ROE), return on asset (ROA), and leverage effect. Please define these terms before discussion.
