Value of share is equal to present value of future earnings

Assignment Help Financial Management

Reference no: EM13848968

Which of the following statements is FALSE?

The value of a share is equal to the present value of all future earnings (EPS).

All else equal, if stock A's dividends grow at a higher rate than stock B's dividends, A is valued higher than B.

P/E ratio is also called earnings multiple because P = appropriate P/E * EPS.

If the current market share price is higher than its intrinsic value, it is over-valued.

Reference no: EM13848968

Questions Cloud

Required return does remain at maturity-find value of bond : Pecos Manufacturing has just issued a 15-year, 12% coupon interest rate, 1000-par bond that pays interest annually. Assuming that the required return does remain at 14% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9..

Graduates earn same returns in future as in the past : Zora and Nelson, who are recent graduates of the prestigious MBA program at Meredith College, have each received $10,000 as graduation gifts. Zora and Nelson share the same birthday and they are both 30 years old. If the two graduates earn the same r..

Disadvantages of investing in stocks and bonds : What are some of the advantages and disadvantages of investing in stocks and bonds? Which investment (stocks or bonds) best fits with your current financial situation?

Value of share is equal to present value of future earnings : The value of a share is equal to the present value of all future earnings (EPS). All else equal, if stock A's dividends grow at a higher rate than stock B's dividends, A is valued higher than B. P/E ratio is also called earnings multiple because P = ..

To increase the market share of your business : You are an agent who wishes to sell a $1 million life insurance policy. Your client thinks she can’t afford a policy that large, so to reduce the price you tell her you will give her 50 percent of your commission. Is this legal or ethical? To increas..

Paid an annual dividend of per share : A company has just paid an annual dividend of $0.75 per share. If the dividends are expected to grow at a rate of 10% p.a. forever and PPT shareholders are known to demand a return of 15%, at what price should PPT shares sell?

What is the price of the stock today : A company has just paid a dividend of $0.52. Next year's dividend is expected to be 15% higher, after which the dividend will remain the same indefinitely. Assuming shareholders require a rate of return of 20%, what is the price of the stock today?

Intends to make its first dividend payment : Hayden Ltd intends to make its first dividend payment 5 years(s) from now. It then intends to pay dividends annually thereafter. The company has announced it expects the first three dividends to all be of the magnitude of around 5 cents per share.

User Account

All Pages