Stock Valuation Practice

Stock Valuation Practice Exercises

Test your understanding of stock valuation principles through interactive practice questions

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Question 1: Zero-Growth Dividend Discount Model

A utility company pays a stable annual dividend of $2.50 per share and investors require a 10% retur...

Beginner

Question 2: Gordon Growth Model Application

Johnson & Johnson pays a $4.24 annual dividend per share, expects 6% annual dividend growth, and has...

Beginner

Question 3: Two-Stage Growth Model

A technology stock is expected to grow dividends at 20% for 5 years, then 4% thereafter. Current div...

Intermediate

Question 4: Price-to-Earnings Ratio Model

A company has earnings per share of $3.50, 35% payout ratio, 15% ROE, and 10% required return. What ...

Intermediate

Question 5: Free Cash Flow to Equity Model

Amazon generated $25 billion in FCFE last year and expects 18% growth for 5 years, then 3% thereafte...

Advanced

Question 6: Required Rate of Return Impact

If a stock's required return increases from 10% to 12%, while dividend and growth remain constant, h...

Intermediate

Question 7: Growth Rate Sensitivity

For a stock valued using the Gordon model, if the expected growth rate increases by 1% (from 5% to 6...

Intermediate

Question 8: Multi-Stage Growth Model Selection

Which company would be most appropriately valued using a three-stage dividend discount model?...

Advanced

Question 9: FCFE vs DDM Appropriateness

For a rapidly growing technology company that doesn't pay dividends and reinvests all earnings, whic...

Intermediate

Question 10: P/E Ratio vs DDM Consistency

A stock trades at 25x P/E while the justified P/E based on fundamentals is 18x. Using the Gordon gro...

Advanced

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