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LOS a: Explain why an analyst would use a ten-year moving average as a benchmark in the valuation process.
Q1. During a CFA analyst meeting, Mark Zastrocci mentions that a moving average over at least 15 years must be used as a historic benchmark if meaningful results are to be obtained when conducting equity valuation. Is Zastrocci correct?
A) Yes, because the CFA performance presentation standards require that a 15-year moving average is used when valuation is reported.
B) No, a 10-year moving average is an acceptable historic benchmark for valuation purposes.
C) No, because the CFA performance presentation standards prohibit the use of moving averages.
Q2. During a CFA society-sponsored dinner meeting, Erica Hill comments to a colleague that a 10-year moving average is an appropriate benchmark to use in the equity valuation process. Is Hill correct?
A) No, because the CFA performance presentation standards prohibit the use of moving averages.
B) Yes, a 10-year moving average is an acceptable historic benchmark.
C) Yes, because the CFA performance presentation standards require the use of a 10-year moving average when reporting valuation results.
Q3. During a CFA conference breakout session, Lan Lee mentions that a 10-year moving average is an appropriate benchmark regardless of whether a firm has experienced a recent downgrade in its growth prospects. Is Lee correct?
A) No, a firm with a recent downgrade in its growth prospects may appear to be cheap relative to its value when its growth prospects were more favorable.
B) No, a firm with a recent downgrade in its growth prospects may appear to be expensive relative to its value when its growth prospects were more favorable.
C) Yes, the use of a moving average assures that relative valuation metrics are accurate regardless of recent growth downgrades. | 
发表于 2009-3-9 17:23
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