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Gennadij [26K]
3 years ago
15

This chapter discusses the discounted dividend and corporate valuation models for valuing common stocks. Three alternative appro

aches, the P/E multiple, Enterprise Values, and EVA approaches, were presented. Explain each approach and how you might use each one to value a common stock.
Business
1 answer:
Anna11 [10]3 years ago
6 0

Answer: The P/E multiple and EVA approach and their use to value common stock.

P/E multiple: The term used for price/earnings multiple reflects the market price of a stock as the times of earnings per share of that company. It determines the investor's willingness towards the current market price of the stock.

Economic value added(EVA): this approach is a measure to evaluate a company stock based on economic value, it has added at a specified time. It considers the opportunity cost of capital invested in the business and the next operating profit generated by the business.

Explanation: The P/E multiple is the basis to analyze the stock price with the earnings so that the appropriate value of a stock is estimated.

The P/E approach can be used as a starting point in stock valuation. If a stock's P/E ratio is well above its industry average and if the stock's growth potential and risk are similar to other firms in the industry, the stock's price may be too high. To estimate a ball-park value multiply the firm's EPS by the industry average P/E ratio.

An alternative approach is based on the concept of Economic Value Added (EVA). Remember, EVA = Equity(ROE - rs). Companies increase their EVA by investing in projects that provide shareholders with returns greater than the cost of capital. When you purchase a firm's stock, you receive more than just the book value of equity—you also receive a claim on all future value that is created by the firm's managers.

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Emily was in an intense conversation with her boss over the budget for her division. She knew what she wanted, and as her boss w
MatroZZZ [7]

Answer:

Evaluative or Critical listening

Explanation:

In evaluative listening, or critical listening, judgments are made about what the other person is saying for assessment of the truth of what is being said.

Listeners judge what is being said against values, assessing them as good or bad, worthy or unworthy.

Evaluative listening is particularly pertinent when the other person is trying to persuade the listener, perhaps to change their behavior and maybe even to change their beliefs.

Evaluative listening is also called critical, judgmental or interpretive listening.

In the scenario, Emily was evaluating what her boss was saying while she was listening and preparing a defensive remark, hence she was practicing evaluative listening.

4 0
3 years ago
A listing broker should: a. deliberately mislead owners about market value to obtain the listing. b. inflate the list price if t
Vinil7 [7]

Answer:

c. suggest a listing price based on comparable market data.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (creditor or investor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time.

Generally, the bond issuer is expected to return the principal at maturity with an agreed upon interest to the bondholder, which is payable at fixed intervals.

The par value of a bond is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a bond gives the basis on which periodic interest is paid. Thus, a bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a bond would be issued at par (face) value when the bond's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.

Generally, a listing broker should suggest a listing price based on comparable market data.

5 0
3 years ago
An investor is currently holding income bonds, preferred stocks, subordinated debentures, and u.s. treasury bonds. which of thes
Andreyy89

Answer: U.S Treasury bonds

One of the main risks of investing is the risk of not getting back the amount invested. This risk is called default risk.

Income bonds, preferred stocks and subordinated debentures have default risk since there is no guarantee by the issuing companies that they will repay the principal, and interest or preferred dividends, as the case may be.

However, if an investor holds a U.S treasury bonds until maturity, the government gives a guarantee on the interest payment and principal amount. Hence the U.S treasury bonds are traditionally considered to have the least risk.

However, even U.S. treasury bonds are sensitive to inflation and interest rates.

8 0
3 years ago
Cormax Games is faced with uncertainty due to the large amount of downloadable, inexpensive games for smartphones and tablets th
Allisa [31]

Answer:

B) Using business intelligence to spot significant data that will increase sales

Explanation:

Business intelligence refers to technologies that analyzes big data and obtains useful information from it. That information is then used by the company to help in their decision making processes. optimize their business processes, discover any problems, improve efficiency, increase revenues and ultimately develop comparative advantages and core competencies over their competitors.

3 0
3 years ago
The domestic supply and demand curves for hula beans are as follows: P = 50 + Q (supply) and P = 200 – Q (demand) where P is the
Iteru [2.4K]

Answer:

Margin of surplus = 1,200

Explanation:

Given:

Supply P = 50 + Q

Demand P = 200 – Q

Current price = 60 cents per pound

Considering a tariff = 40 cents per pound

Computation:

Producers surplus = [10 x 10] / 2

Producers surplus = [100] / 2

Producers surplus = 50

So,

New producers surplus = [50 x 50] / 2

New producers surplus = 1,250

Margin of surplus = 1,250 - 50

Margin of surplus = 1,200

8 0
3 years ago
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