AAII

1. What’s the bottom-line goal of the Valuation Worksheet?

Show you what level the market is at

Help you determine what a stock is worth

2. The valuation formulas equate a stock’s price to a stream of future earnings or dividends.

True

False

3. When the current market price of a stock differs from its estimated value based on historical earnings or dividend growth, it could mean that:

Growth cannot continue at the present rate

The market may not be pricing the stock correctly

Both of the above

4. Why is it important to compare your worksheet figures to competitors as well as market and industry benchmarks?

To evaluate whether your data and assumptions are correct

To verify that your valuations are based on valid inputs

Both of the above

QUIZ: How to Judge a Stock