Financial Statements and Valuation

What does a low share price indicate about a stock?

• The stock is undervalued

• The stock is overvalued

• The stock has limited growth potential

• The stock is expected to grow quickly

What does the P/E ratio compare?

• A stock's price to its company earnings

• A stock's price to its dividends

• A stock's price to its projected future earnings

• A stock's price to its growth potential

How is the P/E ratio calculated?

• By dividing a stock's price by its earnings per share

• By dividing a stock's price by its dividends per share

• By dividing a stock's price by its projected future earnings per share

• By dividing a stock's price by its growth potential per share

What does a high P/E ratio indicate?

• The stock is undervalued

• The stock is overvalued

• The stock has limited growth potential

• The stock is expected to grow quickly

What can justify a high P/E ratio?

• Limited growth potential

• Low earnings per share

• Expected increase in earnings and growth opportunities

• Low stock price

What does beta measure in the stock market?

• The volatility of a stock

• The price of a stock

• The dividend yield of a stock

• The market capitalization of a stock

Which market index is commonly used as a benchmark for beta?

• NASDAQ

• Dow Jones Industrial Average

• S&P 500

• Russell 2000

What does a beta of 1 represent?

• No correlation with the market

• Perfect correlation with the market

• Negative correlation with the market

• Zero volatility

If a stock has a beta greater than 1, it means that the stock is:

• More volatile than the market

• Less volatile than the market

• Unpredictable

• Not affected by market movements

What does a negative beta indicate?

• No correlation with the market

• Inverse relationship with the market

• Higher volatility than the market

• Lower volatility than the market