證券和組合課后習題：tb11

CHAPTER11

ANINTRODUCTIONTOSECURITYVALUATION

TRUE/FALSEQUESTIONS

(f)1Fundamentaliststypicallyusethe“Bottom-UpApproach^^whereastechniciansuse

the"Top-DownApproach“tothevaluationprocess.

(f)2Empiricalstudieshaveshownthatthemarketfactorhasincreasedovertimeand

nowaccountsforthemajorityofanindividualstock'spricevariance.

(t)3Thegeneraleconomicinfluenceswouldincludeinflation,politicalupheavals,

monetarypolicy,andfiscalpolicyinitiatives.

(f)4Givenanoptimisticeconomicandstock-marketoutlookforacountry,the

investorshouldunderweighttheallocationtothiscountryinhis/herportfolio.

(t)5Theimportanceofanindustry'sperformanceonanindividualstock'sperformance

variesacrossindustries.

(t)6Iftheestimatedvalueofanasetisgreaterthanthemarketprice,youwouldwant

tobuytheinvestment.

(t)7Themostdifficultpartofvaluingabondisdeterminingtherequiredrateofreturn

onthisinvestment.

(t)8Apreferredstockisaperpetuity.

(f)9Growthcompaniesarethosefirmsthatconsistentlyearnhigherratesofreturnby

assuminggreateramountsofrisk.

(f)10Thegrowthrateofdividendsandprofitmarginarethemaindeterminantsofthe

P/Eratio.

(t)11Thedividendgrowthmodelsareonlymeaningfulforcompaniesthathavea

requiredrateofreturnthatexceedstheirdividendgrowthrate.

MULTIPLECHOICEQUESTIONS

(e)1Whichofthefollowingisnotaconsiderationinthethree-stepvaluationprocess?

a)Analysisofalternativeeconomies

b)Analysisofsecuritymarkets

c)Analysisofalternativeindustries

d)Analysisofindividualcompanies

e)Noneoftheabove(thatis,allareconsiderationsinthethree-stepvaluation

process)

(d)2Whichofthefollowingisnotconsideredabasiceconomicforce?

a)Fiscalpolicy

b)Monetarypolicy

c)Inflation

d)P/Eratio

e)Noneoftheabove(thatis,allarebasiceconomicforces)

(d)3Theprocessoffundamentalvaluationrequiresestimatesofallthefollowing

factors,except

a)Thetimepatternofreturns.

b)Theeconomy'srealrisk-freerate.

c)Theriskpremiumfortheasset.

d)Thetimesseriesofstockprices.

e)Theexpectedrateofinflation.

(e)4Whichofthefollowingiscorrect?

a)Ifestimatedvalue>Marketprice,youshouldbuy.

b)Ifestimatedvalue>Marketprice,youshouldsell.

c)Ifestimatedvalue<Marketprice,youshouldsell.

d)Ifestimatedvalue<Marketprice,youshouldbuy.

e)Choicesaandc.

(c)5Thevalueofacorporatebondcanbederivedbycalculatingthepresentvalueof

theinterestpaymentsandthepresentvalueofthefacevalueatthebond's

a)Currentyield.

b)Couponrate.

c)Requiredrateofreturn.

d)Effectiverate.

e)Primerate.

(d)6Whichsecuritiescanbevaluedbydividingtheannualdividendbytherequired

rateofreturn?

a)Lowcouponbonds

b)Junkbonds

c)Commonstocks

d)Preferredstocks

e)Constantgrowthcommonstocks

(d)7Accordingtothedividendgrowthmodel,ifacompanyweretodeclarethatit

wouldneverpaydividends,itsvaluewouldbe

a)Basedonearnings.

b)Basedonexpectationsregarding.

c)Higherthansimilarfirmssinceitcouldreinvestagreateramountinnew

projects.

d)Zero.

e)Basedonthecapitalassetpricingmodel.

(d)8Dividendgrowthisafunctionof

a)Returnonequity.

b)Theretentionrate.

c)Thepayoutratio.

d)Alloftheabove.

e)Noneoftheabove.

(c)9Growthratesofthe(1)laborforce,(2)averagenumberofhoursworkedand(3)

laborproductivityarethemaindeterminantsofaforeigncountry's

a)Dividendpayoutratio.

b)Beta.

c)Realriskfreerate.

d)Nominalriskfreerate.

e)Riskpremium.

(d)10Thegrowthrateofequityearningswithoutexternalfinancingisequalto

a)Retentionrateplusreturnonequity.

b)Retentionrateminusreturnonequity.

c)Retentionratedividedbyreturnonequity.

d)Retentionratetimesreturnonequity.

e)Returnonequitydividedbyretentionrate.

(d)11Whichofthefollowingfactorsinfluenceaninvestor'srequiredrateofreturn?

a)Theeconomy'srealrisk-freerate(RFR)

b)Theexpectedrateofinflation(I)

c)Ariskpremium

d)Alloftheabove

e)Noneoftheabove

(e)12TheP/Eratioisdeterminedby

a)Therequiredrateofreturn.

b)Theexpecteddividendpayoutratio.

c)Theexpectedgrowthrateofdividends.

d)Choicesaandb

e)Alloftheabove

MULTIPLECHOICEPROBLEMS

USETHEFOLLOWINGINFORMATIONFORTHENEXTTWOPROBLEMS

Amajorretailerisreevaluatingitsbondssinceitisplanningtoissueanewbondinthe

currentmarket.Thefirm'soutstandingbondissuehas10yearsremaininguntilmaturity.

Thebondswereissuedwitha8percentcouponrate(paidsemiannually)andaparvalue

of$1,000.Becauseofincreasedrisktherequiredratehasrisento10percent.

(c)1Whatisthecurrentvalueofthesesecurities?

a)$686.50

b)$699.00

c)$875.38

d)$868.50

e)$902.00

(e)2Whatwillbethevalueofthesesecuritiesinoneyeariftherequiredreturn

declinesto6percent?

a)$699.00

b)$802.50

c)$1259.05

d)$1012.17

e)$1137.54

USETHEFOLLOWINGINFORMATIONFORTHENEXTTWOPROBLEMS

Amajormanufacturerisreevaluatingitsbondssinceitisplanningtoissueanewbondin

thecurrentmarket.Thefirm'soutstandingbondissuehas8yearsremainingtillmaturity.

Thebondswereissuedwithan8percentcouponrate(paidquarterly)andaparvalueof

$1,000.Becauseofincreasedrisktherequiredratehasrisento12percent.

(a)3Whatisthecurrentvalueofthesesecurities?

a)$796.11

b)$797.84

c)$826.73

d)$862.98

e)$904.00

(c)4Whatwillbethevalueofthesesecuritiesinoneyeariftherequiredreturn

declinesto8percent?

a)$699.50

b)$885.5()

c)$1000.00

d)$998.36

e)$936.72

USETHEFOLLOWINGINFORMATIONFORTHENEXTTWOPROBLEMS

Alargegrocerychainisreevaluatingitsbondssinceitisplanningtoissueanewbondin

thecurrentmarket.Thefirm'soutstandingbondissuehas6yearsremaininguntil

maturity.Thebondswereissuedwitha6percentcouponrate(paidsemiannually)anda

parvalueof$1,000.Becauseofincreasedrisktherequiredratehasrisento10percent.

(c)5Whatisthecurrentvalueofthesesecurities?

a)$656.40

b)$899.00

c)$822.70

d)$569.50

e)$962.00

(d)6Whatwillbethevalueofthesesecuritiesinoneyeariftherequiredreturn

declinesto8percent?

a)$899.43

b)$862.50

c)$869.88

d)$918.93

e)$946.98

(d)7In1998,TalbottInc.issueda$110parvaluepreferredstockthatpaysa9percent

annualdividend.Duetochangesintheoveralleconomyandinthecompany's

financialconditioninvestorsarenowrequiringa1()percentreturn.Whatprice

wouldyoubewillingtopayforashareofthepreferredifyoureceiveyourfirst

dividendoneyearfromnow?

a)$68.38

b)$65.35

c)$71.54

d)$61.87

e)$78.37

(a)8In1998,SmitmanCorp,issueda$5()parvaluepreferredstockthatpaysa8

percentannualdividend.Duetochangesintheoveralleconomyandinthe

company'sfinancialconditioninvestorsarenowrequiringan15percentreturn.

Whatpricewouldyoubewillingtopayforashareofthepreferredifyoureceive

yourfirstdividendoneyearfromnow?

a)$26.67

b)$30.00

c)$31.54

d)$33.38

e)$38.37

(e)9In1998,GreenLeafCo.issueda$63parvaluepreferredstockwhichpaysa7

percentannualdividend.Duetochangesintheoveralleconomyandinthe

company'sfinancialconditioninvestorsarenowrequiringa1()percentreturn.

Whatpricewouldyoubewillingtopayforashareofthepreferredifyoureceive

yourfirstdividendoneyearfromnow?

a)$44.98

b)$40.50

c)$41.44

d)$45.38

e)$44.10

(a)10In1998,DrownyInc.issueda$52parvaluepreferredstockthatpaysan8percent

annualdividend.Duetochangesintheoveralleconomyandinthecompany's

financialconditioninvestorsarenowrequiringan11percentreturn.Whatprice

wouldyoubewillingtopayforashareofthepreferredifyoureceiveyourfirst

dividendoneyearfromnow?

a)$37.82

b)$38.50

c)$39.44

d)$41.38

e)$44.10

(b)11Usingtheconstantgrowthmodel,anincreaseintherequiredrateofreturnfrom

15to17percentcombinedwithanincreaseinthegrowthratefrom7to9percent

wouldcausethepriceto

a)Risemorethan2%.

b)Riselessthan2%.

c)Remainconstant.

d)Fallmorethan2%.

e)Falllessthan2%.

(b)12Usingtheconstantgrowthmodel,anincreaseintherequiredrateofreturnfrom

16to19percentcombinedwithanincreaseinthegrowthratefrom8to11

percentwouldcausethepriceto

a)Risemorethan3%

b)Riselessthan3%.

c)Remainconstant.

d)Fallmorethan3%.

e)Falllessthan3%.

(b)13Usingtheconstantgrowthmodel,anincreaseintherequiredrateofreturnfrom

14to15percentcombinedwithanincreaseinthegrowthratefrom6to7percent

wouldcausethepriceto

a)Risemorethan1%

b)Riselessthan1%.

c)Remainconstant.

d)Fallmorethan1%.

e)Falllessthan1%.

(b)14Usingtheconstantgrowthmodel,anincreaseintherequiredrateofreturnfrom

17to20percentcombinedwithanincreaseinthegrowthratefrom8to11

percentwouldcausethepriceto

a)Risemorethan3%

b)Riselessthan3%.

c)Remainconstant.

d)Fallmorethan3%.

e)Falllessthan3%.

(d)15Usingtheconstantgrowthmodel,anincreaseintherequiredrateofreturnfrom

14to18percentcombinedwithanincreaseinthegrowthratefrom8to12

percentwouldcausethepriceto

a)Fallmorethan4%

b)Falllessthan4%.

c)Risemorethan4%

d)Riselessthan4%.

e)Remainconstant.

USETHEFOLLOWINGINFORMATIONFORTHENEXTTWOPROBLEMS

RidgemontCanCompany'slastdividendwas$1.55andthedirectorsexpecttomaintain

thehistoric5percentannualrateofgrowth.Youplantopurchasethestocktoday

becauseyoufeelthatthegrowthratewillincreaseto8percentforthenextthreeyears

andthestockwillthenreach$22,50pershare.

(b)16Howmuchshouldyoubewillingtopayforthestockifyourequirea15percent

return?

a)$16.97

b)$18.90

c)$21.32

d)$32.63

e)Noneoftheabove

(d)17Howmuchshouldyoubewillingtopayforthestockifyoufeelthatthe8percent

growthratecanbemaintainedindefinitelyandyourequirea15percentreturn?

a)$18.90

b)$19.28

c)$22.14

d)$23.91

e)$25.46

USETHEFOLLOWINGINFORMATIONFORTHENEXTTWOPROBLEMS

TheNationalMotorCompany'slastdividendwas$1.25andthedirectorsexpectto

maintainthehistoric4percentannualrateofgrowth.Youplantopurchasethestock

todaybecauseyoufeelthatthegrowthratewillincreaseto7percentforthenextthree

yearsandthestockwillthenreach$25.00pershare.

(d)18Howmuchshouldyoubewillingtopayforthestockifyourequirea16percent

return?

a)$17.34

b)$18.90

c)$19.09

d)$19.21

e)Noneoftheabove

(c)19Howmuchshouldyoubewillingtopayforthestockifyoufeelthatthe7percent

growthratecanbemaintainedindefinitelyandyourequirea16percentreturn?

a)$11.15

b)$14.44

c)$14.86

d)$18.90

e)$19.24

(e)20RossCorporationpaiddividendspershareof$1.20attheendof1990.Attheend

of2000itpaiddividendspershareof$3.50.Calculatethecompoundannual

growthrateindividends.

a)52.17%

b)34.28%

c)23%

d)19.17%

e)11.29%

(a)21HunterCorporationhadadividendpayoutratioof63%in1999.Theretention

ratein1999was

a)37%

b)63%

c)50%

d)0%

e)100%

(a)22ThebetafortheDAKCorporationis1.25.Iftheyieldon30yearT-bondsis

5.65%,andthelongtermaveragereturnontheS&P500is11%.Calculatethe

requiredrateofreturnforDAKCorporation.

a)12.34%

b)7.06%

c)13.74%

d)5.35%

e)5.65%

(c)23MicroCorp,justpaiddividendsof$2pershare.Assumethatoverthenextthree

yearsdividendswillgrowasfollows,5%nextyear,15%inyeartwo,and25%in

year3.Afterthatgrowthisexpectedtolevelofftoaconstantgrowthrateof10%

peryear.Therequiredrateofreturnis15%.Calculatetheintrinsicvalueusingthe

multistagemodel.

a)$5.56

b)$66.4

c)$49.31

d)$43.66

e)noneoftheabove

(a)24TheP/EratioforBMICorporation21,andtheP/Sratiois5.2.TheindustryP/E

ratiois35andtheindustryP/Sratiois7.5.Basedonrelativevaluation,BMIis

a)undervaluedonthebasisofrelativeP/EandrelativeP/S.

b)overvaluedonthebasisofrelativeP/Eandundervaluedonthebasisof

relativeP/S.

c)undervaluedonthebasisofrelativeP/Eandovervaluedonthebasisof

relativeP/S.

d)overvaluedonthebasisofrelativeP/EandrelativeP/S.

e)noneoftheabove.

USETHEFOLLOWINGINFORMATIONFORTHENEXTFOURPROBLEMS

Considerafirmthathasjustpaidadividendof$2.Ananalystexpectsdividendstogrowatarate

of8%peryearforthenextfiveyears.Afterthatdividendsareexpectedtogrowatanormalrate

of5%peryear.Assumethattheappropriatediscountrateis7%.

(d)25Thedividendsforyears1,2,and3are

a)$2,$2,08,$2.16

b)$2,$2.05,$2.10

c)$2.16,$2.24,$2.32

d)$2.16,$2.33,$2.52

e)$2.07,$2.14,$2.21

(e)26Thefuturepriceofthestockinyear5is

a)$113.40

b)$122.47

c)$132.27

d)$142.85

e)$154.35

(b)27Thepresentvaluetodayofdividendsforyears1to5is

a)$4.06

b)$10.28

c)$12.40

d)$14.52

e)$10.0

(c)28Thepriceofthestocktoday(Po)is

a)$136.29

b)$133.03

c)$120.33

d)$123.43

e)$126.60

USETHEFOLLOWINGINFORMATIONFORTHENEXTFOURPROBLEMS

Considerafirmthathasjustpaidadividendof$1.5.Ananalystexpectsdividendstogrowata

rateof9%peryearforthenextthreeyears.Afterthatdividendsareexpectedtogrowatanormal

rateof5%peryear.Assumethattheappropriatediscountrateis7%.

(b)29Thedividendsforyears1,2,and3are

a)$1.5,$2.0,$2.05

b)$1.64,$1.78,$1.94

c)$1.64,$1-94,$2.24

d)$1.5,$2.40,$3.30

e)$2.07,$2,14,$2.21

(d)3()Thefuturepriceofthestockinyear3is

a)$81.75

b)$84.81

c)$92.56

d)$101.85

e)$111.16

(a)31Thepresentvaluetodayofdividendsforyears1to3is

a)$4.67

b)$3.08

c)$5.67

d)$4.5

e)$1.53

(b)32Thepriceofthestocktoday(Po)is

a)$84.81

b)$87.81

c)$91.09

d)$94.32

e)$97.61

(a)33TaycoCorporationhasjustpaiddividendsof$3pershare.Theearningspershare

forthecompanywas$4.Ifyoubelievethattheappropriatediscountrateis15%

andthelongtermgrowthrateindividendsis6%,andearningsis6%,thefirm's

P/Eratiois

x

a7—

b\8.33

733.33

\

czl

d\44.44

z)11.11

ex

zlNoneoftheabove

CHAPTER11

ANSWERSTOPROBLEMS

1000

1P=40+(l+.O5)20=$875.38

.05

2=$1137.54

1-

1000

3P=20H--------------------7T=$796.11

,03(1+.03)32

4P=40(PVIFA4%,14)+10()0(PVIF4%,i4)

P=40(10.5631)+1000(.5775)=$1()()().()()

5P=30(PVIFA5%,l2)+10()0(PVIF5%,l2)

P=30(8.8633)+1000(.5568)=$822.70

6P=3O(PVIFA4%,IO)+1OOO(PVIF4%,IO)

P=30(8.1109)+1000(.6756)=$918.93

7Dividend=.09x$110=$9.90.?.Price=9.9()+0.16=$61.87

8Dividend=.08x$50=$4.00/.Price=4.00+0.15=$26,67

9Dividend=.07x$63=$4.41/.Price=4.41-J-0.10=$44,10

10Dividend=.08x$52=$4.16/.Price=4.164-0.11=$37,82

11%A=P2/P1=[(D())(l+g2)/(k2-g2)]+[(D0)(l+gi)/(ki-gi)]-1

=[(Do)(l+0.09)/(0.17-0.09)1+[(Do)(l+0.07)7(0.15-0.07)1-1

=(13.625+13.375)-1=1.87%<2%

12%A=P2/P1=[(D0)(l+g2)/(k2-g2)]+[(Do)(l+gi)/(ki-gi)]-1

=[(DO)(1+0.11)/(0.19-0.11)H[(Do)(1+0.08)/(0.16-0.08)]-1

=(13.875+13.50)-1=2.78%<3%

13%A=P2/P1=[(Do)(l+g2)/(k2-g2)]+[(Do)(l+gi)/(k(-g,)]-1

=[(Do)(l+0.07)/(0.15-0.07)1+[(D0)(l+0.06)/(0.14-0.06)]-1

=(13.375+13.25)-1=0.94%<1%

14%A=P2/P1=[(Do)(l+g2)/(k2-g2)l+[(D0)(l+gi)/(k1-g,)]-1

=[(Do)(l+0.11)/(0.20-0.11)]4-[(Do)(l+().()8)/(0.17-0.08)]-1

=(12.33+12.00)-1=2.75%<3%

15%A=P2/P1=[(Do)(l+g2)/(k2-g2)]+[(Do)(l+gi)/(ki-gi)]-1

=[(Do)(l+0.12)/(0.18