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NISM Series VA Mutual Fund Stock Valuation — practice questions

Explore 30 free Stock Valuation questions in NISM Series VA Mutual Fund Finance. Open each question or exercise to read its content, reference answers and available explanation.

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Stock Valuation questions and exercises with answers

Showing questions 1–30 of 30.

An analyst divides a share price by its earnings per share. That gives the:Read the answer and worked solution →The P/E ratio is valuable mainly because it shows the market's:Read the answer and worked solution →A P/E ratio tells you the price paid for each unit of company:Read the answer and worked solution →If earnings stay flat, the P/E ratio can be read as a share's:Read the answer and worked solution →A stock trades at a P/E of six. Analysts say it trades at a multiple of:Read the answer and worked solution →A P/E worked out from actual past earnings per share is called:Read the answer and worked solution →A P/E worked out from projected future earnings is called:Read the answer and worked solution →A single P/E ratio on its own tells an analyst:Read the answer and worked solution →A P/E becomes useful when compared with past values and with firms in the same:Read the answer and worked solution →A big benefit of comparative P/E ratios is that they standardise stocks with different:Read the answer and worked solution →Firms carrying high P/E ratios are commonly interpreted as:Read the answer and worked solution →Comparing a company's market value against its book value gives the:Read the answer and worked solution →Book value represents what remains after a company sells all assets and pays all:Read the answer and worked solution →Net book value equals total assets minus total:Read the answer and worked solution →A fund pays 4 rupees a share on a 100 rupee price. That cash return is the dividend:Read the answer and worked solution →Which ratio suits a firm that is currently making losses?Read the answer and worked solution →A firm has positive cash flow but a bottom line loss. The cause is usually large:Read the answer and worked solution →Valuing a share as the present value of all its future dividends is the:Read the answer and worked solution →The biggest limitation of a dividend discount model is that it fails for firms that pay no:Read the answer and worked solution →A model that values a share on dividends growing at a steady rate is the:Read the answer and worked solution →If a company goes bankrupt, who has the earlier claim on assets?Read the answer and worked solution →Unlike a bond, a preferred share has no:Read the answer and worked solution →Catch the valuation ratiosRead the answer and worked solution →Pop the preferred traitsRead the answer and worked solution →Run the valuation gatesRead the answer and worked solution →Slice the finance wordsRead the answer and worked solution →Earnings or assetsRead the answer and worked solution →Sort the valuation ideasRead the answer and worked solution →Type the numberRead the answer and worked solution →Stock valuation bingoRead the answer and worked solution →

Worked practice questions

An analyst divides a share price by its earnings per share. That gives the:

  1. P/E ratio
  2. PIN number
  3. PAN record
  4. POS receipt
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Correct answer: A. P/E ratio

1. Price sits on top and earnings below. 2. The result is a valuation multiple. 3. That is the P/E ratio. _Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._

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The P/E ratio is valuable mainly because it shows the market's:

  1. Extensions
  2. Expectations
  3. Expenditures
  4. Exemptions
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Correct answer: B. Expectations

1. Investors pay more when they expect growth. 2. The ratio captures that willingness. 3. So it shows expectations. _Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._

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A P/E ratio tells you the price paid for each unit of company:

  1. Earnings
  2. Equipment
  3. Employees
  4. Elections
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Correct answer: A. Earnings

1. The denominator is earnings per share. 2. The numerator is what you pay. 3. So it is price per unit of earnings. _Source: OpenStax Principles of Finance, Chapter 11, Stocks and Stock Valuation._

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