1.The price to cash flow (P/CF) model has grown in popularity for all of the following reasons EXCEPT:

A)   CFs are more easily estimated than future dividends.

B)   CFs are generally more difficult to manipulate than earnings.

C)   CFs are used extensively in valuation models.

D)   CFs may be used for firms that have negative earnings per share or do not pay dividends.

2.Which of the following is NOT an advantage of using price-to-book value (PBV) multiples in stock valuation?

A)   Book value provides a relatively stable, intuitive measure of value.

B)   PBV ratios can be compared across similar firms if accounting standards are consistent.

C)   Book values are very meaningful for firms in service industries.

D)   Book value is often positive, even when earnings are negative.

3.One advantage of using price-to-book value (PBV) multiples for stock valuation is that:

A)   most of the time it is close to the market value.

B)   it is a stable and simple benchmark for comparison to the market price.

C)   accounting standards for assets are always consistent across firms.

D)   book value of a firm can never be negative.

4.One advantage of price/sales (P/S) multiples over price to earnings (P/E) and price-to-book value (PBV) multiples is that:

A)   P/S is easier to calculate.

B)   Regression shows a strong relationship between stock prices and sales.

C)   P/S is more volatile than P/E multiples and, therefore, more reliable for use in valuation.

D)   P/S can be used for distressed firms.

5.Of the following types of firm, which is most suitable for P/B ratio analysis?

A)   A firm with a negative book value.

B)   A service industry firm without significant fixed assets.

C)   A firm with accounting standards consistent to other firms.

D)   A firm with accounting standards different from other firms.

答案和详解如下：

1.The price to cash flow (P/CF) model has grown in popularity for all of the following reasons EXCEPT:

A)   CFs are more easily estimated than future dividends.

B)   CFs are generally more difficult to manipulate than earnings.

C)   CFs are used extensively in valuation models.

D)   CFs may be used for firms that have negative earnings per share or do not pay dividends.

The correct answer was A)

CFs are not easier to estimate than dividends.

2.Which of the following is NOT an advantage of using price-to-book value (PBV) multiples in stock valuation?

A)   Book value provides a relatively stable, intuitive measure of value.

B)   PBV ratios can be compared across similar firms if accounting standards are consistent.

C)   Book values are very meaningful for firms in service industries.

D)   Book value is often positive, even when earnings are negative.

The correct answer was C)

Book values are not very meaningful for firms in service industries.

3.One advantage of using price-to-book value (PBV) multiples for stock valuation is that:

A)   most of the time it is close to the market value.

B)   it is a stable and simple benchmark for comparison to the market price.

C)   accounting standards for assets are always consistent across firms.

D)   book value of a firm can never be negative.

The correct answer was B)

Book value provides a relatively stable measure of value that can be compared to the market price. For investors who mistrust the discounted cash flow estimates of value, it provides a much simpler benchmark for comparison. Book value may or may not be closer to the market value, and accounting standards for assets also vary from firm to firm. (At times, firms may use different methods for accounting depreciation.). A firm may have negative book value if it shows accounting losses consistently.

4.One advantage of price/sales (P/S) multiples over price to earnings (P/E) and price-to-book value (PBV) multiples is that:

A)   P/S is easier to calculate.

B)   Regression shows a strong relationship between stock prices and sales.

C)   P/S is more volatile than P/E multiples and, therefore, more reliable for use in valuation.

D)   P/S can be used for distressed firms.

The correct answer was D)

Unlike the PBV and P/E multiples, which can become negative and not meaningful, the price/sales multiple is meaningful even for distressed firms (that may have negative earnings or book value).

5.Of the following types of firm, which is most suitable for P/B ratio analysis?

A)   A firm with a negative book value.

B)   A service industry firm without significant fixed assets.

C)   A firm with accounting standards consistent to other firms.

D)   A firm with accounting standards different from other firms.

The correct answer was C)

Assuming consistent accounting standards across firms, P/B ratios can reveal signs of misvaluation across firms.