{"id":527,"date":"2023-03-28T16:13:18","date_gmt":"2023-03-28T16:13:18","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/?post_type=chapter&p=527"},"modified":"2023-03-30T18:37:38","modified_gmt":"2023-03-30T18:37:38","slug":"review-questions-3","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/chapter\/review-questions-3\/","title":{"raw":"Review Questions","rendered":"Review Questions"},"content":{"raw":"
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Chapter 8 Review Questions<\/h2>\r\n1<\/span>. <\/span>Briefly discuss one of the primary benefits of using comparative P\/E ratios.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
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\r\n\r\n \r\n\r\n2<\/span>. <\/span>Name an important characteristic of companies for which the price-to-book (P\/B) ratio does not work well.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n3<\/span>. <\/span>Briefly describe the main type of scenario in which the two-stage DDM approach might be used to value a firm and its stock.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
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\r\n\r\n \r\n\r\n4<\/span>. <\/span>Briefly describe a major shortcoming of the zero growth DDM model.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
\r\n
\r\n
\r\n\r\n \r\n\r\n5<\/span>. <\/span>Briefly describe the required inputs for the discounted cash flow (DCF) model.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
\r\n
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\r\n\r\n \r\n\r\n6<\/span>. <\/span>Briefly describe preferred stock and some of its ownership advantages compared to common stock.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
\r\n
\r\n\r\n \r\n\r\n7<\/span>. <\/span>Briefly explain what is meant by the terms\u00a0<\/span>cumulative<\/i>\u00a0and\u00a0<\/span>noncumulative<\/i>\u00a0as they relate to preferred stocks.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
\r\n
\r\n
\r\n\r\n \r\n\r\n8<\/span>. <\/span>What were SuperDOT and SOES, and what were they designed to do?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
\r\n
\r\n\r\n \r\n\r\n9<\/span>. <\/span>What are operational efficiency and informational efficiency, and how do they differ in terms of trading markets?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
\r\n
\r\n\r\n \r\n\r\n10<\/span>. <\/span>What is meant by informational efficiency, and how does it affect the price of a stock?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>","rendered":"
\n
\n
\n

Chapter 8 Review Questions<\/h2>\n

1<\/span>. <\/span>Briefly discuss one of the primary benefits of using comparative P\/E ratios.<\/span><\/p>\n<\/div>\n<\/div>\n

\n
\n

 <\/p>\n

2<\/span>. <\/span>Name an important characteristic of companies for which the price-to-book (P\/B) ratio does not work well.<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

3<\/span>. <\/span>Briefly describe the main type of scenario in which the two-stage DDM approach might be used to value a firm and its stock.<\/span><\/p>\n<\/div>\n<\/div>\n

\n
\n

 <\/p>\n

4<\/span>. <\/span>Briefly describe a major shortcoming of the zero growth DDM model.<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

5<\/span>. <\/span>Briefly describe the required inputs for the discounted cash flow (DCF) model.<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

6<\/span>. <\/span>Briefly describe preferred stock and some of its ownership advantages compared to common stock.<\/span><\/p>\n<\/div>\n<\/div>\n

\n
\n

 <\/p>\n

7<\/span>. <\/span>Briefly explain what is meant by the terms\u00a0<\/span>cumulative<\/i>\u00a0and\u00a0<\/span>noncumulative<\/i>\u00a0as they relate to preferred stocks.<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

8<\/span>. <\/span>What were SuperDOT and SOES, and what were they designed to do?<\/span><\/p>\n<\/div>\n<\/div>\n

\n
\n

 <\/p>\n

9<\/span>. <\/span>What are operational efficiency and informational efficiency, and how do they differ in terms of trading markets?<\/span><\/p>\n<\/div>\n<\/div>\n

\n
\n

 <\/p>\n

10<\/span>. <\/span>What is meant by informational efficiency, and how does it affect the price of a stock?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n","protected":false},"author":101,"menu_order":18,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-527","chapter","type-chapter","status-publish","hentry"],"part":34,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/users\/101"}],"version-history":[{"count":2,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/527\/revisions"}],"predecessor-version":[{"id":1184,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/527\/revisions\/1184"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/parts\/34"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/527\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/media?parent=527"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapter-type?post=527"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/contributor?post=527"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/license?post=527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}