Investments 2 Exam Question and answers correctly solved
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Course
GARP
Institution
GARP
Investments 2 Exam Question and answers correctly solved Tells investors if the previous ratio/measure is justified by a specific growth rate. Most GARP investors look for this ratio/measure to be less than one. - correct answer P/E/G
Tells investors how much they are paying for $1 of earning...
Investments 2 Exam #1 Ratios
Tells investors if the previous ratio/measure is justified by a specific growth
rate. Most GARP investors look for this ratio/measure to be less than one. -
correct answer ✔P/E/G
Tells investors how much they are paying for $1 of earnings in a particular
company. For example, a value of 0 to 10 indicates an undervalued (or
declining) stock. - correct answer ✔P/E
Comes from partitioning the current stock price into 2 parts, one reflecting the
current earnings and the other reflecting expected future growth in those
earnings. This ratio/measure is based on the latter of these two partitions.
value investors prefer this ratio/measure to be low because they are more
concerned with the bird in the hand, but growth investors often want a higher
value bc they care a great deal more about the bird in the bush. - correct
answer ✔Present Value Growth Opportunity (PVGO)
Also called dividend/price ratio. Investors like it to be stable and/or constantly
growing. - correct answer ✔Dividend Yield
Is a specific earnings ratio/measure that equals funds available to
management minus short-term CAPEX - correct answer ✔Free Cash Flow
Is a specific earnings ratio/measure that equals EBITDA plus depreciation
minus taxes - correct answer ✔OCF
Compares market value to book value. If book value is accurate, when this
ratio/measure is below one, it indicates that an investor could buy all of a
firm's stock, sell all of its assets, and make a profit. - correct answer ✔Price
to Book Value or MVIBV; Tobin's Q = MV/RV
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