Substitute comparative valuation ratio

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Reference no: EM1356677

In some cases for equity valuation, Price Earnings ratios are not available, for example, with internet startups with no earnings, or with negative earnings. What is a substitute comparative valuation ratio for P/E that might be used in such an instance?

a. sales figures

b. net income

c. price to sales ratio

d. cash flow coverage ratio

e. none of the above

Each of two securities, ABC and XYZ are expected to pay a dividend of $7 in the upcoming year. The expected growth rate of dividends is 6% for both stocks. You require a return of 10% on ABC and 12% on XYZ. Using the constant growth DDM, the intrinsic value of stock ABC____________.

a. Will be the same as the intrinsic value of stock XYZ

b. Will be greater than the intrinsic value of stock XYZ

c. Will be less than the intrinsic value of stock XYZ

d. More information is needed to answer this question.

A company with an expected earnings growth rate which is greater than that
of the typical company in the same industry, most likely has _________.

a. A dividend yield which is greater than that of the typical company

b. A dividend yield which is less than that of the typical company

c. Less risk than the typical company

d. More employees than a typical company in the same industry

e. None of the above

Which of the following trades on an exchange?

a. Open end mutual fund

b. Hedge Funds

c. Closed end mutual fund

d. All of the above

e. None of the above

Reference no: EM1356677

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