1. The Price-earnings (PE) ratio could best be defined as __________.

Select one:

a. value of the stock on the open market

b. closely related to the dividend discount model

c. what dividend percentage payout the stock pays

d. how much a stockholder is willing to pay per dollar of earnings

2. Which of the following common profitability ratios indicates the ability of a company to generate income from the funds invested by its common stockholders?

Select one:

a. Profit margin

b. Return on assets

c. Gross profit margin

d. Return on stockholders' equity

3. You note that your client's ROE has increased significantly from the previous year. This could be the result of

Select one:

a. distributing stock dividends.

b. buying back treasury shares near year end.

c. a two for one stock split.

d. Decrease in profit margin.

e. None of the answers listed.

4. The cash flows provided, or used, by _______ activities indicate a companys ability to generate cash.

Select one:

a. operating

b. financing

c. investing

d. all of these answer choices are correct