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WorksheetsEquity Securities
Total questions: 30
Worksheet time: 2hrs 30mins
What type of stock would have voting rights?
preferred stock
common stock
stock
option
Security analysis is one step in a larger investment process that involves:
Establishing the objectives of the investor or fund
Forming expectations about the future returns and risks of individual securities
Combining individual securities into portfolios to maximize progress toward the investment objectives
All of the above
In what market scenario, would an issuer generally exercise a call option in a callable bond
Falling interest rates
Rising interest rates
Rising inflation
Option exercise has nothing to do with interest rates or inflation
Company X currently has book value per share of THB 20 and cost of equity of 12%. If its ROE is 15% and dividend payout ratio is 80%, its next dividend payment is:
2.40
3.00
0.60
1.92
Company X currently has book value per share of THB 20 and cost of equity of 12%. If its ROE is 15% and dividend payout ratio is 80%, its sustainable growth rate is:
3%
2.4%
12%
9.6%
Company X currently has book value per share of THB 20 and cost of equity of 12%. If its ROE is 15% and dividend payout ratio is 80%, its share value is closest to:
26.66
33.33
20.00
25.00
Based on the information provided, dividend in year 3 will be:
1.76
2.81
1.92
2.20
Based on the information provided, if the cost of equity is 16%, the stock value is closest to:
11.15
14.20
9.33
10.00
Suppose a company has net income of THB 1,500 million with 500 million shares outstanding. If its PE ratio is 16x, its price is:
48.00
24.00
16.00
3.00
What is the differences between stocks and bonds?
They are both investments.
A stock is what corn grows on, and a bond gets you out of jail.
Stock represents ownership, and bonds represents your word.
A stock represents ownership, and bonds represents a loan.
Which of the following statements about private equity securities is incorrect?
They cannot be sold on secondary markets
They have market-determined quoted prices.
They are primarily issued to institutional investors.
Calculate the return on equity (ROE) of a stable company using the following data (see attachment). Answer with 1 decimal, example 5.2, 4.0
(a)
Holding all other factors constant, which of the following situations will most likely lead to an increase in a company’s return on equity?
The market price of the company’s shares increases.
Net income increases at a slower rate than shareholders’ equity
The company issues debt to repurchase outstanding shares of equity.
All are correct
Calculate the total return on a share of equity using the following data: Purchase price: $50 Sale price: $42 Dividend paid during holding period: $2
-12.0%
12.0%
-14.3%
14.3%
-16.0%
Which of the following statements is least accurate in describing a company’s market value?
Management’s decisions do not influence the company’s market value.
Increases in book value may not be reflected in the company’s market value
Market value reflects the collective and differing expectations of investors.
Which of the following measures is the most difficult to estimate?
The cost of debt.
The cost of equity.
Investors’ required rate of return on debt.
ROE
ROA
