Balance Sheet and Value
Learning Goal 6:
Explain the relationships among financial decisions, return, risk, and the firm's value.
1)
Any action taken by the financial manager that increases risk will also increase the required return. True or False 2)
In common stock valuation, any action taken by the financial manager that increases risk will cause an increase the required return. True or False 3)
In common stock valuation, any action taken by the financial manager that increases risk will cause an increase in value. True or False 4)
An action on the part of a firm that increases the level of expected cash flows without a corresponding increase in risk should reduce share value; An action that reduces the level of expected cash flows without a corresponding decline in risk should increase share value. True or False 5)
Assuming that economic conditions remain stable, any management action that would cause current and prospective stockholders to raise their dividend expectations should decrease the firm's value. True or False 6)
Tangshan China's stock is currently selling for $160.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Tangshan China's most recent dividend was $5.50. If the expected risk free rate of return is 3 percent, the expected market return is 8 percent, and Tangshan has a beta of 1.2, Tangshan's stock would be ________. A) overvalued B) undervalued C) properly valued D) not enough information to tell 7)
Tangshan China's stock is currently selling for $160.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Tangshan China's most recent dividend was $5.50. If the expected risk free rate of return is 3 percent, the expected market premium is 4 percent, and Tangshan has a beta of 1.2, Tangshan's stock would be ________. A) overvalued B) undervalued C) properly valued D) not enough information
Explain the relationships among financial decisions, return, risk, and the firm's value.
1)
Any action taken by the financial manager that increases risk will also increase the required return. True or False 2)
In common stock valuation, any action taken by the financial manager that increases risk will cause an increase the required return. True or False 3)
In common stock valuation, any action taken by the financial manager that increases risk will cause an increase in value. True or False 4)
An action on the part of a firm that increases the level of expected cash flows without a corresponding increase in risk should reduce share value; An action that reduces the level of expected cash flows without a corresponding decline in risk should increase share value. True or False 5)
Assuming that economic conditions remain stable, any management action that would cause current and prospective stockholders to raise their dividend expectations should decrease the firm's value. True or False 6)
Tangshan China's stock is currently selling for $160.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Tangshan China's most recent dividend was $5.50. If the expected risk free rate of return is 3 percent, the expected market return is 8 percent, and Tangshan has a beta of 1.2, Tangshan's stock would be ________. A) overvalued B) undervalued C) properly valued D) not enough information to tell 7)
Tangshan China's stock is currently selling for $160.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Tangshan China's most recent dividend was $5.50. If the expected risk free rate of return is 3 percent, the expected market premium is 4 percent, and Tangshan has a beta of 1.2, Tangshan's stock would be ________. A) overvalued B) undervalued C) properly valued D) not enough information