Investment Market Analysis and Valuation 3

Question 1

What is the Price-to-Sales (P/S) ratio?

Accepted Answer

The ratio of a company's stock price to its annual revenue per share

Answer

The ratio of total profit to total sales volume

Answer

A measure of how much of a stock's price is supported by dividend income

Answer

The ratio of institutional to retail investor ownership

Question 2

What does a high P/E ratio generally suggest about investor sentiment?

Accepted Answer

Investors expect strong future earnings growth and are willing to pay a premium for current earnings

Answer

Investors believe the stock is currently overpriced and expect prices to fall

Answer

The company pays high dividends relative to its earnings

Answer

The company has more debt than equity on its balance sheet

Question 3

What is the Discounted Cash Flow (DCF) valuation method?

Accepted Answer

A valuation technique that estimates a company's value by projecting future cash flows and discounting them to present value

Answer

A method of pricing bonds based on their coupon payments

Answer

A discount brokerage method for calculating trading commissions

Answer

A formula for calculating the present value of dividend payments only

Question 4

What does 'support level' mean in technical analysis?

Accepted Answer

A price floor where a stock has historically found buying interest and stopped declining

Answer

The regulatory minimum price required for a stock to remain listed on an exchange

Answer

The government intervention level that prevents stocks from falling too far

Answer

A broker's guaranteed minimum price on a limit order

Question 5

What is the meaning of 'return on equity' (ROE)?

Accepted Answer

A measure of profitability showing how much net income a company generates for each dollar of shareholder equity

Answer

The percentage of total assets financed by shareholder equity

Answer

The annual dividend return on a preferred stock investment

Answer

The total equity value returned to shareholders through buybacks

Question 6

What is a company's book value?

Accepted Answer

The value of a company's total assets minus its total liabilities, representing net asset value

Answer

The price at which the company's stock was first offered to the public

Answer

The maximum valuation assigned by analysts covering the stock

Answer

The total revenue generated by a company in the prior fiscal year