Equity Flashcards
calculates a current value for future dividend payouts
dividend discount model
A consultant reviewing the valuation of a security chooses to look at what the company may pay out to shareholders in the future as a core variable in calculating the value of a share today based on a growth rate the consultant believes will be accurate for that payout. The consultant is using the
dividend discount model
Shareholder equity can be found on the
balance sheet
Investors interested in comparing the profitability of companies to those in similar industries should review each company’s:
return on equity
Operating cash flow is similar to
net income
In the practice of fundamental analysis, consultants review
quantative and qualatative
represented by the company’s hard assets
book value
An investor is considering reducing home-bias exposure in a portfolio. The investor’s consultant advises that this action will
decrease portfolio correlations
strategies limit losses
defensive
investor would like to place stop orders on equities and focus on blue-chip stocks and short-term bonds
defensive
help determine a discount rate for a company
WACC
The investor wants to use stock price and company revenue as a basis for analysis
Price to sales
strategies change as the market and economy change
dynamic
indicate the impact of a division sale
cash from investing
A company is trading at $52 per share and has earned $0.62 per share every quarter in the prior 12 months. If the company paid a $5 dividend during that time, the trailing P/E ratio should be:
21
An investor wants to review the profitability of a company for the year 2009.
income statement
typically do not have voting rights
Preferred shareholders
covered in corporate governance
executive compensation
An investor would like to know how much money must be invested to receive one dollar in company earnings from a company the investor wants to invest in
PE Ratio
The free cash flow model focuses primarily on a company’s
operating cash flow after expenditures
An investor using a free cash flow model sees that a publicly traded company has negative free cash flow
Company is making large investments
Individual investors who see that the weighted average cost of capital is greater than the company yield may infer that the compan
losing money
