[PDF] Top 20 CFA 2018 Level 2 Equity Quest bank Residual Income Valuation QBank

... 8. Northern Airways has a current book value of $15 per share. The company's expected long- term ROE is 15% and its cost of equity is 11%. The company maintains a dividend payout ratio of 70% and has constant ... Lihat dokumen lengkap

... 8. B is correct. The pecking order theory, suggests that managers choose methods of financing according to a hierarchy that gives first preference to methods with the least potential information content (internally ... Lihat dokumen lengkap

... 2. B is correct. Results oriented pay packages and incentives along with contractual clauses such as tag-along, drag-along rights for management are helpful in better aligning of economic interests between private ... Lihat dokumen lengkap

... 16. B is correct. If decisions are based on accounting income rather than cash flows, then the projects chosen are not in the long-run economic interest of the company. Underestimating or overestimating overhead ... Lihat dokumen lengkap

... fixed income analyst at a securities firm, makes the following statements regarding valuation of option-free bonds, “My method will calculate the same values for option-free bonds as those produced by a ... Lihat dokumen lengkap

... 21. Jim James is estimating the fair takeover price for Universal Industries’ proposed acquisition of CMX Manufacturers. James has gathered the acquisition price and relevant data of three recent acquisitions of ... Lihat dokumen lengkap

... 4. B is correct. Using Equation 6: Equity risk premium = Div. yield on index based on next year aggregated forecasted dividends & aggregate market value + long-term earnings growth rate- current long-term ... Lihat dokumen lengkap

... The residual dividend policy is based on paying out dividends from internally generated funds after financing the current year’s capital ...million. Residual cash flow = dividend = $100 - $64 = $36 ... Lihat dokumen lengkap

... 25. A is correct. If interest rates are lowered, the yields on Bliss’s bonds are likely to decrease and Bond Y (callable) may be called. B is incorrect because if the equity market declines, Bliss’s stock price ... Lihat dokumen lengkap

... 86. Alex Karachanis, CFA, is an independent financial advisor with a roster of over 100 clients. Along with advisory services, he also facilitates in executing the trades for his clients and manages their ... Lihat dokumen lengkap

... 15. Parma Ltd.'s recent annual earnings were $8 a share and current annual dividend per share is $4.8. Its earnings and dividends are expected to grow by 8%. The company operates in the technology sector therefore has a ... Lihat dokumen lengkap

... 17. C is correct. Differences in market values of individual companies in the same industry but trading in different countries is a common factor and is unlikely to create difficulty in relative valuations. The ... Lihat dokumen lengkap

... 8. Cannon Co. is a small private leather goods’ manufacturer. An analyst estimates that the beta of similar public companies is 1.1, the risk free rate is 4% and market risk premium is 6%. In addition, the small stock ... Lihat dokumen lengkap

... 16. Bellavine Co. generated FCFE of $1,800 last year. The cash flow is expected to grow at 8% for the next three years after which it will grow at 3% annually. The market value of the company ’s debt outstanding is ... Lihat dokumen lengkap

... Creative Gardening is expected to have a return on equity (ROE) of 13% for the next five years and 10% thereafter, indefinitely. Its current book value per share as of the beginning of year 1 (i.e., the end of ... Lihat dokumen lengkap

... 8. A is correct. Using aggressive estimates and assumptions such as long depreciable lives, may indicate an attempt to either boost current income or hide problems with performance in the current period. Using ... Lihat dokumen lengkap

... 26. C is correct. The relationship between bond prices and market discount rate is not linear. The percentage price change is greater in absolute value when the market discount rate goes down than when it goes up by the ... Lihat dokumen lengkap

... 3. Analyst 1: While running a simulation, if there is a strong correlation across two inputs, we can pick only one of the two inputs. We can pick the input that has a bigger impact on value. Analyst 2: While ... Lihat dokumen lengkap

... Unethical behavior arises due to a potential conflict between the goals of the enterprise, or the goals of individual managers, and the fundamental rights of important stakeholders.. Sec[r] ... Lihat dokumen lengkap

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