1. An income investor would prefer which type of relationship?
stock dividend yield > T-bill rate
stock dividend yield < T-bill rate
stock dividend yield > sales growth
stock dividend yield < sales growth
2. If a stock had the following characteristics, it is mostly likely to be a _____ stock. Characteristics include a safety rating of 1, a PE ratio between 10 and 25 and a dividend yield more than 2%.
growth
income
contrarian
GARP
3. Investors usually prefer stocks that have _____ certain cash flows because the future stock price will be _____.
a. more; lower
b. more; higher
c. less; higher
d. less; lower
4. Stock returns tend to come evenly over an extended time period.
True
False
5. A company earns 80% of its sales and profits from food and the remaining from beverages. The company has just released a new beverage that it thinks will do well. In fact, the company spends most of its time during the analysts meeting talking about the new beverage. Which of the following is TRUE?
a. The analyst should focus entirely on the new beverage in his calculation of the value of the stock
b. The analyst should focus entirely on the food division in his calculation of the value of the stock
c. The analyst should focus on the food division for around 80% of the valuation of the stock and 20% on beverages and the new beverage
d. The analyst should focus on the food division for around 20% of the valuation of the stock and 80% on beverages and the new beverage