VALUATION OF SHARES

What is the definition of a share?

• A portion of ownership in a company
• A portion of debt owed by a company
• A portion of profits earned by a company
• A portion of liabilities in a company

What is the formula for calculating dividend yield?

• Dividend per share / Market price
• Market price / Dividend per share
• Dividend per share * Market price
• Market price * Dividend per share

What is the formula for calculating price to earnings (P/E) ratio?

• Market price per share / Earnings per share
• Earnings per share / Market price per share
• Market price per share * Earnings per share
• Earnings per share * Market price per share

How does the market price of a share change?

• It depends on the company's financial performance
• It is influenced by supply and demand
• It is influenced by the company's fixed assets
• It is influenced by the company's liabilities

What is the difference between a growth stock and a value stock?

• Growth stocks have high potential for earnings growth
• Value stocks have high potential for earnings growth
• Growth stocks have low potential for earnings growth
• Value stocks have low potential for earnings growth

What is the significance of a stock's beta coefficient?

• It measures the stock's volatility
• It measures the stock's dividend yield
• It measures the stock's P/E ratio
• It measures the stock's market price

If a company's earnings per share is $2 and its market price per share is $40, what is its P/E ratio?

• 20
• 0.05
• 42
• 0.025

If a company paid a dividend of $2 per share and its market price per share is $50, what is its dividend yield?

• 0.04
• 0.1
• 0.25
• 0.4

A company has a beta coefficient of 1.5. If the market return is 10%, what is the expected return on the stock?

• 0.15
• 0.05
• 1.5
• 0.5

Company A has a P/E ratio of 30 and Company B has a P/E ratio of 20. Which company is considered more expensive?

• Company A
• Company B
• Both are equally expensive
• It cannot be determined