Reading 44: Private Company Valuation-LOS a 习题精选

div, companies, contrast, valuation

Session 12: Equity Investments: Valuation Models
Reading 44: Private Company Valuation

LOS a: Compare and contrast public and private company valuation.

An analyst is examining three companies. Given the information below, which of them is most likely to be a private firm?

Firm	Number of Years in Operation	Market Capitalization	Required Return for Common Stock
A	12 years	$1,324.8 million	14.8%
B	4 years	$1,313.9 million	18.3%
C	19 years	$2,231.0 million	16.4%

Firm A.

Firm C.

Firm B.

The firm most likely to be a private firm is Firm B. Compared to public firms, private firms are less mature (4 years for Firm B), smaller (market cap of B is $1,313.9 million), and have higher required returns (required return for B is 18.3%).

土豆妮

游客

UID: 137525
帖子: 5724
主题: 885
注册时间: 2009-7-1
最后登录: 2011-3-29

2^#

发表于 2010-4-20 11:17 | 只看该作者

An analyst is examining the stock of three companies. Given the information below, which of them is most likely to be the stock of a private firm?

Firm	Restrictions on Sale of Stock?	DLOM	Stock Ownership of 5 Largest Owners
A	Yes	0%	28%
B	No	5%	35%
C	Yes	15%	64%

Firm C.

Firm B.

Firm A.

The stock most likely to be that of a private firm is Firm C. Compared to public stock, private firm stock often has agreements that prevent shareholders from selling, is less liquid (discounts for lack of marketability (DLOM) of C is 15%), and control is usually concentrated in the hands of a few shareholders (stock ownership of largest owners of Firm C is 64%).

TOP

土豆妮

游客

UID: 137525
帖子: 5724
主题: 885
注册时间: 2009-7-1
最后登录: 2011-3-29

3^#

发表于 2010-4-20 11:18 | 只看该作者

Which of the following statements most accurately describes the difference between private and public firm managers?

A)	Because managers in a public firm are often paid with incentive compensation, public managers may take a longer term view than private managers.

B)	Because managers in a private firm are concerned with having the firm go public, private managers may take a shorter term view than public managers.

C)	Although managers in a public firm are often paid with incentive compensation, public managers may take a shorter term view than private managers because shareholders often focus on the short-term.

Although managers in a public firm are often paid with incentive compensation such as options, shareholders often focus on short-term measures such as quarterly earnings and the consistency of such. Management may therefore take a shorter term view than they otherwise would. Private firms should be able to take a longer term view.

TOP

suodi

游客

UID: 123920
帖子: 1393
主题: 0
注册时间: 2009-2-24
最后登录: 2012-8-21

4^#

发表于 2010-5-7 11:07 | 只看该作者

[em50]

TOP

返回列表

Reading 44: Private Company Valuation-LOS a 习题精选

[收藏此主题] [关注此主题的新回复]

[通过 QQ、MSN 分享给朋友]