The valuation of common stock is more complicated than the valuation of either bonds or preferred stock because I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertain

The valuation of common stock is more complicated than the valuation of either bonds or preferred stock because I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertain

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 6QTD

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The valuation of common stock is more complicated than the valuation of either bonds or preferred stock because... which of the below statement are true? I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertain
The valuation of common stock is more complicated than the valuation of either bonds or preferred stock because I.Dividends of common stock are expected to grow at an uneven rate II. Cash flows of common stock are generally more uncertain III. The dividends of common stock are usually not declared IV. Cash flows of bonds or preferred stock are usually uncertain Select one: a.II only b.I and II only c.II and III only d.I only
Which of the following statements is false? The cost of debt securities is highest due to their relatively low risk The cost of common stock is highest due to its relatively high risk The cost of preferred stock falls somewhere between debt and common stock None of the above
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An analyst is trying to determine the intrinsic value of a certain share. Which of the following is true with regards to the methods of stock valuation? a. Discounting techniques does not involve forecasting future dividends b. Free cash flow is important in discounted dividend model c. Aside from the intrinsic value, the market value of the firm can also be determined by free cash flow model d. Non-constant growth stock is valuated in the same way as preferred stock
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All of the following statements regarding common stock valuation are correct EXCEPT I. fundamental analysis seeks to estimate the intrinsic value of a stock, which is a function of its expected return and risk II. as for expected returns, because dividends are the only cash flows directly paid by a corporation, they are the logical choice for a present value model I only II only Both I and II Neither I nor II
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