Question 29:

Choose the best answer: What is profit shifting through dividends?

A) The concept that dividends paid now have no impact on future earnings B) The concept that dividends paid now increase future earnings C) The concept that dividends paid now shift future earnings

Choose the best answer: How is residual income calculated?

A) Net income - (Return on equity required x Market value) B) Net income - (Return on equity required x Book value) C) Net Income - (ROE x Book Value)

Choose the best answer: What is the reason to look at the beneficiary surprises? A) Positive surprises are an indicator of market weakness B) Positive surprises indicate poor financial management C) Positive surprises can be associated with persistent positive abnormal returns

Choose the best answer: FCFF and FCFE Evaluation Approaches A) The companys free cash flow (FCFF) is always greater than the shareholders' free cash flow (FCFE) B) The companys free cash flow (FCFF) is always less than the shareholders' free cash flow (FCFE) C) None of these answers

Choose the best answer What is one of the residual income assumptions? A) The relationship of own surplus does not exist B) The relationship of own surplus exists C) Residual income is always positive

Choose the best answer: What is the main reason for using the P/E ratio? A) P/E is linked to book value B) P/E is linked to equity performance C) P/E is linked to dividend yield