| Current year’s dividend per share |
作者: bingning 时间: 2009-6-30 16:41
82. A call market is least likely characterized as a market:
A. with bid-ask prices posted by dealers.
B. where buy-sell orders are cleared at a single equilibrium price.
C. with participation by a small number of active investors-traders.
Answer: A
“Organizing and Functioning of Securities Markets,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, pp. 14-15
Study Session 13-52-c
Distinguish between call and continuous markets.
In a call market traders/investors indicate their bids and asks for stocks and they are not posted by dealers. Also, a call market is not a dealer or quote-driven market.
83. The annual report of a company as at the end of its first year of its operation contains the following data:
| Common stock $0.50 par value – Authorized (2,500,000 shares) |
$ 1,250,000 |
| – Issued (2,000,000 shares) |
$ 1,000,000 |
| Additional paid-in-capital |
$10,000,000 |
| Retained earnings |
$ 4,000,000 |
| Current price per share |
$30 | The company’s ending inventories using LIFO are valued at $1,500,000 and a footnote to financial statements reports inventories valued using FIFO would be $1,900,000. The company’s tax rate is 30 percent. The FIFO adjusted price-to-book value of the company is closest to:
A. 3.93.
B. 4.00.
C. 4.08.
Answer: A
“Introduction to Price Multiples,” John D. Stowe, CFA, Thomas R. Robinson, CFA, Jerald E. Pinto, CFA, and Dennis W. McLeavey, CFA
2009 Modular Level I, Volume 5, pp. 194-196
Study Session 14-59-b
Calculate and interpret P/E, P/BV, P/S, and P/CF.
Inventory Adjustment = $400,000 x 0.70 = $280,000: (FIFO – LIFO values) x (1-Tax rate)
BV per share = $1 m + $10 m + $4 m + $0.28 m = $15.28 / 2 m sh. = $7.64.
Price-to-book value = $30 / $7.64 = 3.93
84. An analyst gathers the following data about a company with a double-digit growth rate that is expected to continue for three more years:
| Current year’s dividend per share |
作者: bingning 时间: 2009-6-30 16:46
85. An equity fund manager gathers the following data in order to assess the investment potential of a company and its stock:
| |
Company |
Industry
Average |
| Weighted average cost of capital (WACC) |
14% |
12% |
| Return on Assets (ROA) |
20% |
15% |
| Dividend Yield |
0 % |
1.2% |
| Consensus estimate of stock’s value |
$53 |
N/A |
| Current price of company’s stock |
$50 |
N/A | Based on the above information, which of the following statements most accurately describes the company and its stock? The company is a:
A. growth company and its stock is a growth stock.
B. growth company and its stock is a speculative stock.
C. speculative company and its stock is a growth stock.
86. Free cash flow to equity is most accurately described as operating free cash flow adjusted for:
A. only interest payments to debt holders.
B. payments to both debt holders (interest and principal) and preferred stockholders.
C. both interest and principal payments to debt holders, but not payments to preferred stockholders.
87. Assuming efficient markets and a lack of access to superior analysts, which of the following is the least important activity in managing portfolios?
A. Minimizing total transaction costs.
B. Diversifying completely on a global basis.
C. Paying close attention to the monetary policy environment.
作者: bingning 时间: 2009-6-30 16:46
85. An equity fund manager gathers the following data in order to assess the investment potential of a company and its stock:
| |
Company |
Industry
Average |
| Weighted average cost of capital (WACC) |
14% |
12% |
| Return on Assets (ROA) |
20% |
15% |
| Dividend Yield |
0 % |
1.2% |
| Consensus estimate of stock’s value |
$53 |
N/A |
| Current price of company’s stock |
$50 |
N/A | Based on the above information, which of the following statements most accurately describes the company and its stock? The company is a:
A. growth company and its stock is a growth stock.
B. growth company and its stock is a speculative stock.
C. speculative company and its stock is a growth stock.
Answer: A
“Company Analysis and Valuation,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, pp.160-162
Study Session 14-58-a
Differentiate between 1) a growth company and a growth stock, 2) a defensive company and a defensive stock, 3) a cyclical company and a cyclical stock, 4) a speculative company and a speculative stock, and 5) a value stock and a growth stock.
The company is a growth company since the spread between ROA and WACC is larger than the industry average and its dividend yield is 0% compared to the industry average of 1.2%. The company’s stock is a growth stock considering its undervaluation.
A speculative stock, on the other hand, would be overvalued.
86. Free cash flow to equity is most accurately described as operating free cash flow adjusted for:
A. only interest payments to debt holders.
B. payments to both debt holders (interest and principal) and preferred stockholders.
C. both interest and principal payments to debt holders, but not payments to preferred stockholders.
Answer: B
“Understanding the Cash Flow Statement,” Thomas R. Robinson, CFA, Jan Hendrik van Greuning, CFA, R. Elaine Henry, CFA and Michael A. Broihahn, CFA
2009 Modular Level I, Volume 3, pp. 279-280
“An Introduction to Security Valuation,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, p. 135
Study Session 8-34-i, 14-56-g
Explain and calculate free cash flow to the firm, free cash flow to equity, and other cash flow ratios.
Describe a process for developing estimated inputs to be used in the DDM, including the required rate of return and expected growth rate of dividends.
Free cash flow to equity is derived after adjusting the operating free cash flow for payments to debt holders (interest and principal) as well as preferred stockholders.
87. Assuming efficient markets and a lack of access to superior analysts, which of the following is the least important activity in managing portfolios?
A. Minimizing total transaction costs.
B. Diversifying completely on a global basis.
C. Paying close attention to the monetary policy environment.
Answer: C
“Efficient Capital Markets,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, pp. 87-89
Study Session 13-54-c
Explain the implications of stock market efficiency for technical analysis, fundamental analysis, the portfolio management process, the role of the portfolio manager, and the rationale for investing in index funds.
In efficient markets and without access to superior analysts, portfolio management calls for minimizing the transaction costs and diversifying completely on a global basis. Paying attention to the monetary policy and evaluating its implications for portfolio management is appropriate for portfolio managers with access to superior analysts.
作者: bingning 时间: 2009-6-30 16:59
88. An analyst gathers the following data about a company in order to estimate its price/earnings (P/E) ratio.
| Expected dividend payout ratio |
40% |
| Return on equity |
15% |
| Required rate of return |
12% |
| Stock’s current market price |
$75 | The P/E ratio is closest to:
A. 6.7 x.
B. 13.3 x.
C. 20.0 x.
89. For growth companies which of the following components of ROE is most likely to decline first?
A. Profit margin.
B. Financial leverage.
C. Total assets turnover.
90. Which of the following is least likely included in the assumptions of an informationally efficient securities market?
A. A large number of profit-maximizing participants analyze and value securities.
B. New information regarding securities comes to the market in a predictable manner.
C. Profit-maximizing investors adjust security prices rapidly to reflect the effect of new information.
作者: bingning 时间: 2009-6-30 17:00
88. An analyst gathers the following data about a company in order to estimate its price/earnings (P/E) ratio.
| Expected dividend payout ratio |
40% |
| Return on equity |
15% |
| Required rate of return |
12% |
| Stock’s current market price |
$75 | The P/E ratio is closest to:
A. 6.7 x.
B. 13.3 x.
C. 20.0 x.
Answer: B
“An Introduction to Security Valuation,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, p. 137, 146-147
Study Session 14-56-d, g
Show how to use the DDM to develop an earnings multiplier model, and explain the factors in the DDM that affect a stock’s price-to-earnings (P/E) ratio.
Describe a process for developing estimated inputs to be used in the DDM, including the required rate of return and expected growth rate of dividends.
Growth rate = g = RR x ROE = (1 - 0.40) x 15 = 9%; P/E1 = D1/E1 ÷ (k - g) = 0.40 ÷ (0.12 - 0.09) = 13.33
89. For growth companies which of the following components of ROE is most likely to decline first?
A. Profit margin.
B. Financial leverage.
C. Total assets turnover.
Answer: A
“Financial Analysis Techniques,” Thomas R. Robinson, CFA, Jan Hendrik van Greuning, CFA, R. Elaine Henry, CFA and Michael A. Broihahn
2009 Modular Level I, Volume 3, pp. 520-525
“An Introduction to Security Valuation,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, pp. 146-147
Study Session 10-39-e, 14-56-e
Demonstrate the application of and interpret changes in the component parts of the
DuPont analysis (the decomposition of return on equity).
Estimate the dividend growth rate, given the components of the required return on equity and incorporating the earnings retention rate and current stock price.
For growth companies profit margin is one of the first ratios to decline due to increased competition and forced price cuttings.
90. Which of the following is least likely included in the assumptions of an informationally efficient securities market?
A. A large number of profit-maximizing participants analyze and value securities.
B. New information regarding securities comes to the market in a predictable manner.
C. Profit-maximizing investors adjust security prices rapidly to reflect the effect of new information.
Answer: B
“Efficient Capital Markets,” Frank K. Reilly, CFA, and Keith C. Brown, CFA
2009 Modular Level I, Volume 5, p. 62-63
Study Session 13-54-a
Define an efficient capital market and describe and contrast the three forms of the efficient market hypothesis (EMH).
The assumption that the new information comes to the market in a predictable manner is an inaccurate statement. The correct assumption is that the new information comes to the market in a random fashion.
作者: viss 时间: 2010-11-8 22:03
thx
作者: zippo1986 时间: 2010-11-11 11:57
Thanks
作者: xxjj564 时间: 2011-2-9 09:24
thx
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