Reading 34: The Equity Valuation Process- LOS b ～ Q1-3 valuation, following, reputation, patent, factors

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LOS b: Contrast quantitative and qualitative factors in valuation.

Q1. Which of the following would be a qualitative factor in asset valuation?

A)   The Food and Drug Administration has rejected the firm's new patent application.

B)   The new CEO has a reputation for financial gimmickry.

C)   Earnings are down 4% in a quiet market.

 

Q2. The fact that the CEO has hired his wife as CFO could be what type of factor in the asset valuation analysis?

A)   A qualitative factor.

B)   An internal factor.

C)   A quantitative factor.

 

Q3. Which of the following would be a quantitative factor in asset valuation?

A)   The CFO has been indicted for fraud.

B)   Required return on corporate bonds has increased.

C)   Top management has turned over often in the last two years.

danforth

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