1. What is the most important determinant of stock price in an efficient market?

Information about past events and beliefs about future events

The trading system that connects buyers and sellers within the market

The number of traders participating in the market

The ability of investors to perfectly adjust prices based on new information

2. An analyst employed by a pension fund to identify stocks to be purchased is referred to as:

		a sell-side analyst.
		a buy-side analyst.
		an institutional analyst.
		a money manager.

3. Which of the following is not one of the steps in using discounted cash flow to value a company?

Estimate the amount and timing of the future stream of cash flows

Estimate an appropriate discount rate

Use a present value model to calculate an intrinsic value

Compare the intrinsic value to the relative value metric

4. Carl is evaluating a stock that just paid a dividend of $2.00 per share. He expects this dividend to grow by 4% per year, and he has determined that 11% is the appropriate required return. What is the most he should pay for the stock?

$18.18

$18.91

$28.57

$29.71

5. Which of the following is not a term used to describe the denominator in the discounted cash flow model?

		Discount rate
		Compounding rate
		Required rate of return
		Capitalization rate