1 . One advantage ofusing price-to-book value (PBV) multiples for stock valuation is that:
A most of the time itis close to the market value.
B)it is a stable andsimple benchmark for comparison to the market price.
C)book value of a firmcan never be negative.
金程cfa解析：Book value provides arelatively stable measure of value that can be compared to the market price.For investors who mistrust the discounted cash flow estimates of value, itprovides a much simpler benchmark for comparison. Book value may or may not becloser to the market value. A firm may have negative book value if it showsaccounting losses consistently.
2 .The last dividend paid on a common stock was $2.00, thegrowth rate is 5% and investors require a 10% return. Using the infinite perioddividend discount model, calculate the value of the stock.
金程cfa解析：2(1.05) / (0.10 - 0.05)= $42.00
3.Baker Computerearned $6.00 per share last year, has a retention ratio of 55%, and a return onequity (ROE) of 20%. Assuming their required rate of return is 15%, how muchwould an investor pay for Baker on the basis of the earnings multiplier model?
金程cfa解析：g = Retention × ROE =(0.55) × (0.2) = 0.11
P0/E1 = 0.45 / (0.15 ?0.11) = 11.25
Next year's earnings E1= E0 × (1 + g) = (6.00) × (1.11) = $6.66
P0 = 11.25($6.66) =$74.93
4.A firm’s cost ofequity capital is least accurately described as the:
A)ratio of the firm’snet income to its average book value.
B)minimum rate of returninvestors require to invest in the firm’s equity securities.
C)expected total returnon the firm’s equity shares in equilibrium.
金程cfa解析：The ratio of the firm’snet income to its average book value is the firm’s return on equity, which canbe greater than, equal to, or less than the firm’s cost of equity. Cost ofequity for a firm can be defined as the expected equilibrium total return inthe market on its equity shares, or as minimum rate of return that investorsrequire as compensation for the risk of the firm’s equity securities.
5.Assuming a discountrate of 15%, a preferred stock with a perpetual dividend of $10 is valued atapproximately:
金程cfa解析：The formula for thevalue of preferred stock with a perpetual dividend is: D / kp, or 10.0 / 0.15 =$66.67.