1. Which of the following increases the price an investor is willing to pay for stock?

The investor increases his estimate of the constant growth rate for dividends.

The investor decreases his estimate of the constant growth rate for dividends.

The investor increases his estimate of the required rate of return.

The investor assumes a higher beta for the stock.

2. What are two major approaches used to value stocks?

Discounted cash flow techniques and absolute valuation techniques

Discounted cash flow techniques and relative valuation techniques

Compound free cash flow techniques and relative valuation techniques

Markowitz diversification techniques and relative valuation techniques

3. Which of the following statements concerning index funds and actively managed funds is true?

		Their performance is about equal.
		They tend to have an inverse relationship.
		Actively managed funds tend to outperform index funds.
		Index funds tend to outperform actively managed funds.