1|Page
SDSU BA 323 FINANCE EXAM 2 NEWEST 2026/2027
ACTUAL VERIFIED EXAM COMPLETE QUESTIONS
AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |A+ GRADED||NEWEST EXAM!!!
Size depends on the perceived risk of the stock market
and investors' degree of risk aversion. - answer-two
factors that influence the market risk premium?
Discount dividend model, corporate valuation model, and
models based on market multiples. - answer-three
approaches for estimating the value of a common stock?
States that a stock's required return equals the risk-free
return plus a risk premium that reflects the stock's risk
after diversification.
Illustrates the relevant riskiness of a stock is its
contribution to the riskiness of a well-diversified portfolio. -
answer-security market line and what does it illustrate?
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Value of a stock is the present value of the future
dividends expected to be generated by the stock. -
answer-discount dividend model
Also called the free cash flow method. Suggests the value
of the entire firm equals the present value of the firm's free
cash flows. - answer-corporate valuation model
(n.) An agent, substitute; a written permission allowing one
person to act in another's place - answer-proxy
A method of valuing a target company that applies a
market determined multiple to net income, earnings per
share, sales, book value, and so forth. Common multiples
are:
P/e, p/cf, p/sales
Earnings per share * pe ratio - answer-market multiple
analysis
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An attempt by a person or group to gain control of a firm or
win a corporate vote. **most are settled** - answer-proxy
fight
Stock sold to public. - answer-class a stock
Hybrid security with features of a stock and bond.
Like bonds, preferred stockholders receive a fixed
dividend that must be paid before dividends are paid to
common stockholders
However, companies can omit preferred dividend
payments without fear of pushing the firm into bankruptcy.
- answer-preferred stock
Vp = d/rp
Dividend payment + required rate of return on common
stock. - answer-value of preferred stock equation
Typically retained by the company's insiders. Often have
multiple votes per share. **lots of this? Poor corporate
governance!** - answer-class b stock
SDSU BA 323 FINANCE EXAM 2 NEWEST 2026/2027
ACTUAL VERIFIED EXAM COMPLETE QUESTIONS
AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |A+ GRADED||NEWEST EXAM!!!
Size depends on the perceived risk of the stock market
and investors' degree of risk aversion. - answer-two
factors that influence the market risk premium?
Discount dividend model, corporate valuation model, and
models based on market multiples. - answer-three
approaches for estimating the value of a common stock?
States that a stock's required return equals the risk-free
return plus a risk premium that reflects the stock's risk
after diversification.
Illustrates the relevant riskiness of a stock is its
contribution to the riskiness of a well-diversified portfolio. -
answer-security market line and what does it illustrate?
,2|Page
Value of a stock is the present value of the future
dividends expected to be generated by the stock. -
answer-discount dividend model
Also called the free cash flow method. Suggests the value
of the entire firm equals the present value of the firm's free
cash flows. - answer-corporate valuation model
(n.) An agent, substitute; a written permission allowing one
person to act in another's place - answer-proxy
A method of valuing a target company that applies a
market determined multiple to net income, earnings per
share, sales, book value, and so forth. Common multiples
are:
P/e, p/cf, p/sales
Earnings per share * pe ratio - answer-market multiple
analysis
, 3|Page
An attempt by a person or group to gain control of a firm or
win a corporate vote. **most are settled** - answer-proxy
fight
Stock sold to public. - answer-class a stock
Hybrid security with features of a stock and bond.
Like bonds, preferred stockholders receive a fixed
dividend that must be paid before dividends are paid to
common stockholders
However, companies can omit preferred dividend
payments without fear of pushing the firm into bankruptcy.
- answer-preferred stock
Vp = d/rp
Dividend payment + required rate of return on common
stock. - answer-value of preferred stock equation
Typically retained by the company's insiders. Often have
multiple votes per share. **lots of this? Poor corporate
governance!** - answer-class b stock
