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LOS g: Contrast absolute valuation models to relative valuation models.
Q1. Joe Dentice has an opportunity to buy 5% of Gold Star Oil, Inc., a closely held oil company. He wants to value the company so as to be able to make a decision on the fair price to pay for the investment.
List the steps in the top down valuation approach as it is applicable for Gold Star investment. Forecast the growth of:
A) Gold Star, the growth of each firm in the industry, and then the growth of the oil industry.
B) the overall economy, growth of the industry, and the growth rate of Gold Star.
C) each firm in the oil industry, the growth rate of the oil industry, and the growth rate of the economy.
Q2. Which of the following models would be most suitable to value Gold Star?
A) Relative valuation.
B) Liquidation value.
C) Absolute valuation.
Q3. Which discounts must be taken into account while valuing the investment opportunity? Joe should take into account the:
A) marketability, liquidity, and minority discounts in the valuation.
B) marketability, liquidity, and control premium in the valuation.
C) marketability, liquidity, and majority discounts in the valuation.
Q4. A valuation of a firm based on the intrinsic value of the firm’s investment characteristics is known as an:
A) asset based valuation.
B) absolute valuation.
C) absolution valuation.
Q5. A valuation of a firm based on the comparison of the firm with the market value of other firms is known as a:
A) comparison valuation.
B) peer group valuation.
C) relative valuation.
Q6. valuation of a firm based on a review of other firms' price to earnings, price to sales, and price to return on investment ratios is an example of a:
A) broad-based valuation.
B) relative strength valuation.
C) relative valuation.
Q7. Which of the following two ratios are likely to be used for determining value as a function of company peer benchmarks?
A) Return on equity and net profit margin.
B) Price-to-sales and debt/equity.
C) Price-to-earnings and price-to-book. | 
发表于 2009-3-5 09:32
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