Financial: Fundamental Analysis and Superior Investment Results

 Question 1
0.33333 out of 0.33333 points

The risk-adjusted required rate of return includes
1. the firm's earnings
2. the firm's beta coefficient
3. the treasury bill rate (i.e., the risk-free rate)

Selected Answer:
2 and 3

 Question 2
0.33333 out of 0.33333 points

A stock's price will tend to fall if
1. the firm's beta declines
2. the firm's beta increases
3. the risk-free rate declines
4. the risk-free rate increases

Selected Answer:
2 and 4

 Question 3
0.33333 out of 0.33333 points

A P/E ratio depends on
1. the firm's dividends
2. the price of the stock
3. the firm's per share earnings

Selected Answer:
2 and 3

 Question 4
0.33333 out of 0.33333 points

The use of price to book ratios to select stocks suggests that

Selected Answer: a stock should be purchased if it is selling near its historic low price to book ratio

 Question 5
0.33333 out of 0.33333 points

According to the efficient market hypothesis, purchasing high P/E stock should not produce superior investment results.

Selected Answer:
True

 Question 6
0.33333 out of 0.33333 points

According to the dividend-growth model, the valuation of common stock depends on
1. the firm's dividends
2. investors' required rate of return
3. the prior year's dividends

Selected Answer:
1 and 2

 Question 7
0.33333 out of 0.33333 points

A low price to sales ratio suggests

Selected Answer: the stock may be undervalued

 Question 8
0.33333 out of 0.33333 points

If the financial markets were not efficient,

Selected Answer: an investor may consistently outperform the market

 Question 9
0.33333 out of 0.33333 points

If the ratio of price to book exceeds 1.0,

Selected Answer: the price of the stock is greater than the accounting value of the firm

 Question 10
0.33333 out of 0.33333 points

According to the efficient market hypothesis, purchasing low P/S stocks should produce superior