|
LOS a, (Part 1): Discuss the rationales for the use of price to earnings (P/E), price to book value (P/BV), price to sales (P/S), and price to cash flow (P/CF) in equity valuation.
Q1. One advantage of using price-to-book value (PBV) multiples for stock valuation is that:
A) it is a stable and simple benchmark for comparison to the market price.
B) most of the time it is close to the market value.
C) book value of a firm can never be negative.
Q2. Which of the following is NOT an advantage of using price-to-book value (PBV) multiples in stock valuation?
A) Book values are very meaningful for firms in service industries.
B) Book value is often positive, even when earnings are negative.
C) PBV ratios can be compared across similar firms if accounting standards are consistent.
Q3. Of the following types of firm, which is most suitable for P/B ratio analysis?
A) A firm with accounting standards different from other firms.
B) A service industry firm without significant fixed assets.
C) A firm with accounting standards consistent to other firms.
Q4. 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 can be used for distressed firms.
B) P/S is easier to calculate.
C) Regression shows a strong relationship between stock prices and sales.
Q5. Which of the following is least likely a reason the price to cash flow (P/CF) model has grown in popularity?
A) CFs are generally more difficult to manipulate than earnings.
B) CFs are used extensively in valuation models.
C) CFs are more easily estimated than future dividends.
| 
发表于 2009-3-2 14:42
| 
