Which of the following, in theory, determines the price of a share?
A. It will be the same as its EPS
B. It will be the same as the price it was sold at when the share was issued
C. The discounted present value of the expected future earnings of the firmdivided by the number of shares in issue
D. The value of this year's dividend
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Which of the following best describes the risk-free rate?
A. The rate of interest on a loan
B. The rate of dividend on a preference share
C. The minimum return that a shareholder will accept on a company's shares
D. The minimum return a shareholder will accept to compensate for tying their money up and suffering loss of value due to inflation.
The present value of Megalith's forecast future cash flows is now $267 million. What will happen to this value if Megalith plc's cost of equity rises?
A. It will rise
B. It will fall
C. It will remain the same
D. It is impossible to say
In the last financial year, a company made $200 million profit from operations, before deducting interest charges of $10 million and tax liabilities of $55 million. Its capital employed was $800 million, consisting of debt of $80 million and equity of $720 million. What was the company's return on capital employed (ROCE) for the last financial year?
A. 16.9%
B. 18.1%
C. 23.8%
D. 25.0%
XYZ Co's shareholders require a constant dividend payment of $2 per share. If the required rate of return has increased from 8% to 10%, how much has the value of the shares fallen by?
A. 5%
B. 10%
C. 15%
D. 20%