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
