[PDF] Top 20 CFA 2018 Quest bank Level 2 Corporate Finance Industry Company Analysis

... the company has declined over the last three years due to production issues but the company has been able to raise prices as competitors withdrew from ... Lihat dokumen lengkap

... “We should develop our own internal credit rating model that allows the analysts to alter ratings corresponding to changes in the business cycle. These internal ratings can provide an ordinal ranking of corporate ... Lihat dokumen lengkap

... 15. B is correct. Friedman’s basic position is that the only social responsibility of a business is to increase profits, but the company has to stay within the rules of law. According to him businesses should not ... Lihat dokumen lengkap

... Bootstrapping involves a high growth, high P/E ratio firm purchasing slow growth firms with low P/E ratios. The low P/E implies that the acquiring firm can purchase the firm "cheap" since its stock exhibits a ... Lihat dokumen lengkap

... 1. B is correct. Bottles Co. ’s P/E multiple based on market price is less than the average industry P/E, hence the company is undervalued based on method of comparables. Its P/E based on market price (i.e. ... Lihat dokumen lengkap

... 20. A is correct. The economic profit (which is computed as the spread between return on capital and the cost of capital) tends to be larger in industries with differentiated products, greater pricing power, and high ... Lihat dokumen lengkap

... manufacturing industry. The company has found it difficult to pay dividends over the years due to debt financing ...the company has been profitable over the last few years, its free cash flows have ... Lihat dokumen lengkap

... 4. Firm A is a struggling company in the manufacturing industry . Demand for the company’s products has declined markedly over the last two years and is unlikely to pick up again. Firm B is an established ... Lihat dokumen lengkap

... Epler's first comment is correct. When graphing a company's WACC according to the static trade-off theory, the WACC will initially decline as a company increases its tax savings through the use of debt. However, ... Lihat dokumen lengkap

... biotech company has a new blockbuster drug that will increase its profitability, but to produce and market the drug, the company needs to raise ...the company sells new stock, then as sales (and thus ... 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

... 13. C is correct. Repricing of stock options is when the company with the board’s approval adjusts downward the exercise price of option grants relative to current price of the stock. This typically happens when ... Lihat dokumen lengkap

... Domez Company is considering an investment of $500,000 in a new ...The company currently uses straight-line depreciation but wants to evaluate the effect of a switch from straight-line to accelerated ... Lihat dokumen lengkap

... 6. A is correct. Firms such as high-growth companies, pharmaceutical companies, information technology companies and others in the service industry with few tangible assets which are not readily marketable have ... Lihat dokumen lengkap

... a company dividend policy should have no impact on its cost of capital or on shareholder wealth, hence dividend policy is irrelevant given perfect capital market assumptions, ignoring taxes or transaction costs ... Lihat dokumen lengkap

... that corporate governance best practice supports having the Chairman and CEO as separate ...about company strategy and operations, if management is doing their job, it will provide the board with all ... Lihat dokumen lengkap

... public company method (GPCM) approach to private company valuation uses price multiples from traded public companies with adjustments for risk ...subject company; it works best when using recent, ... Lihat dokumen lengkap

... 1. C is correct. The purpose of active management is to seek excess risk adjusted returns by way of investment analysis. An investment is NOT expected to yield abnormal positive returns when its market price is ... Lihat dokumen lengkap

... 10. An analyst is estimating the cost of equity for Company A, and uses regression to estimate the value of beta. The regression estimate of beta is 1.6. The risk free rate is 5.0% and the average market index ... Lihat dokumen lengkap

... 2. A is correct. Trader violated Standard VI (A) – Disclosure of Conflicts, by not reporting her directorship, stock ownership and cash compensation that she received on account of her position as a director of ... Lihat dokumen lengkap