1. Which one of the following must be true for a firm trading above its book value?

1. Assets understated in its balance sheet
2. The firm has high growth opportunities
3. Both A and/or B
4. Assets overstated in balance sheet

2. On December 31, 2020, a stock was trading at $30. Analysts were forecasting an annual dividend of $3 per year indefinitely. If your required rate of return is 11 percent, what is the value of the stock to you according to Dividend Discount Model (DDM)?

A. $37.00 B. $27.27 C. $33.00 D. $30.00

3. Please refer back to information in (2) above. If the $3 annual dividend is expected to grow at an annual rate of 2%, what would be the value of the stock under Gordon Growth Model?

A. $37.00 B. $27.27 C. $33.00 D. $33.33

4. You bought some shares of the stock of a company for $30 on January 2, 2021 and sold those shares on March 13, 2021 for $47. You received $2 of dividend against those shares in February 2021. What is your payoff against the investment above?

A. $47 B. $2 C. $19 D. $49

5. A companys P/E ratio is 25. It does not pay any dividend. What is its earnings yield?

A. 25% B. 4% C. 0% D. 5%

6. The current market price of Apple stock is $154.30. Its total earnings in the last 4 quarters was $5.15. Apple is expected to pay 22 per share in the next quarter. What is its dividend yield?

A. 0.14% B. 14.26% C. 0.57% D. 5.7%

7. The current market price of Apple stock is $154.30. Its earnings per share in the last quarter (quarter ending June 30, 2021) was $1.30 while its total earnings per share in the last 4 quarters was $5.15. Apple is expected to pay 22 per share in the next quarter. What is its earnings yield?

A. 19.92% B. 17.91% C. 0.84% D. 3.34%