Chapter 9 & 10

Question 1

A valuation model that users dividends and their growth properaly discounted back to the present

Answer 1

Dividend-growth valuation model

Question 2

The price/ earnings ratio divided by the growth rate of earnings

Answer 2

PEG ratio

Question 3

Income plus price appreciation during a specified time period divided by the cost of the investment

Answer 3

Holding period return (HPR)

Question 4

The discount rate the equates the cost of an investment (cash outflows) with the cash in flows generated by the investment

Answer 4

Rate of return (internal rate of return or IRR)

Question 5

The rate that equates the present value of cash inflows and cash outflows; the internal rate of return

Answer 5

Dollar-weighted rate of return

Question 6

Geometric average of individual holding period returns

Answer 6

Time-weighted rate of return

Question 7

The purchase of securities at different intervals to reduce the impact of price fluctuations

Answer 7

Dollar cost averaging

Question 8

A system for the accumulation of shares in which the investor periodically buys the same number of shares

Answer 8

Share averaging