Reference no: EM132871771

1. I heard talk of the Earnings Yield Gap ratio, which is the difference between the inverse of the PER and the TIR on 10-year-bonds.It is said that if this ratio is positive then it is more advantageous to invest in equity. How much confidence can an investor have in such an affirmation?

2. I have a doubt regarding the Enron case. How could such a prestigious investments bank advice investing when the quotations of the shares were falling?

3. Is the following affirmation of an accountancy expert true? "The valuation criterion which reflects the value of the shares of a company in the most accurate manner is based on the amount of the shareholder's equity of its balance sheet. Stating that the value of a company's shares equals its book value is a valid argument."

4. Why can we not calculate the required return (Ke)from the Gordon- Shapiro model(p0= DIV0(1+g)/(ke-g) instead of using the CAPM ?As we know the current dividend (Div0)and the current share price(p0),we can obtain the growth rate of the dividend from the formular g=ROE(1-p)/(1-ROE(1-p),p being the payout.

5. Assume I calculate g as ROE (1-p)/(1-ROE(1-p)) and the Ke from the CAPM. I replace both values in the formula PER =(ROE(1+g) -g)/ROE (Ke-g) but the PER I obtain is totally different from the one I get by dividing the quotation of the share to the earnings per share. Is it possible to interpret that difference as an overvaluation or undervaluation of that share on the market?

6. When calculating the WACC ,is the weighing of the debt and the shares done with book values of debt and shareholder's equity or with market values?

7. The market risk premium is the difference between the historical return on the stock market and the risk-free rate , for every year. why is it negative for some years?

8. Is it correct results' capitalization" which, according to the Institute of Accounting and Auditing (ICAC), represents the to say that the value of the shares is the "value of the" book value of shareholder's equity, corrected by increases or increasing in value which could be demonstrated, in the case of the goods, rights and obligations of the company at the reference date?"

9. Is it correct results' capitalization" which, according to the Institute of Accounting and Auditing (ICAC), represents the to say that the value of the shares is the "value of the" the sum of the expected future results of the company during a certain period, discounted at the moment of the valuation?"