CFA Level 1 － 模考试题(3)（AM）－Q86-90 industry, within, 考试题, style

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Question 86 

There are five firms within an industry with the following market shares: 35%, 2%, 22%, 26%, and 15%. The three-firm concentration ratio and Herfindahl index for this industry are closest to: 

Concentration Ratio    Herfindahl Index

A)       83%                  0.24

B)       83%                  0.26

C)       59%                  0.24

D)       59%                  0.26

 

Question 87 

Which of the following statements regarding price multiples is most accurate? 

A) A disadvantage of the price/book value ratio is that it is not an appropriate measure for firms that primarily hold liquid assets.

B) A rationale for using the price/cash flow ratio is that there is only one clear definition of cash flow.

C) The price/earnings ratio can be useful even if earnings are negative.

D) An advantage of the price/sales ratio is that it is meaningful even for distressed firms.

 

Question 88 

An analyst projects the following pro forma financial results for Magic Holdings, Inc., in the next year:

  ♣ Sales of $1,000,000 

  ♣ Earnings of $200,000 

  ♣ Total assets of $750,000 

  ♣ Equity of $500,000 

  ♣ Dividend payout ratio of 62.5% 

  ♣ Shares outstanding of 50,000 

  ♣ Risk free interest rate of 7.5% 

  ♣ Expected market return of 13.0% 

  ♣ Stock Beta at 1.8 

If the analyst assumes Magic Holdings, Inc. will produce a constant rate of dividend growth, the value of the stock is closest to:

A) $44

B) $23

C) $19

D) $104

 

Question 89 

Which of the following choices is least likely a characteristic of an efficient market? 

A) Market participants react quickly to news, and these reactions are quickly reflected in prices. 

B) A large number of participants value securities independent of other parties.

C) Expected returns implicitly include a risk component.

D) Major news announcements are grouped together to minimize the market impact of any one announcement.

 

Question 90 

Which of the following statements regarding primary and secondary capital markets is least accurate? 

A) An underwriter provides origination, risk bearing, and distribution services to an issuer.

B) Secondary financial markets are markets in which securities trade after their initial public offerings.

C) Secondary equity issues are new shares issued by firms whose shares are already publicly traded.

D) In continuous markets, bids and offers are accumulated and trades take place at a price that clears the market.

 

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答案和详解如下：

Question 86 

 

The correct answer was B) 83%                       0.26

The 3-firm concentration ratio is the percentage market share of the three largest firms calculated as: 

0.35 + 0.22 + 0.26 = 0.83 = 83%

The Herfindahl index is always less than one and is calculated as the sum of the squared market shares of the firms in the industry: 

0.35² + 0.02² + 0.22² + 0.26² + 0.15² = 0.26

This question tested from Session 14, Reading 58, LOS d

 

Question 87 

The correct answer was D) 

The P/S ratio is meaningful even for distressed firms, since sales revenue is always positive. This is not the case for the P/E and P/BV ratios, which can be negative. 

In the P/BV ratio book value is an appropriate measure of net asset value for firms that primarily hold liquid assets. 

Analysts use several different definitions of cash flow (CFO, adjusted CFO, FCFE, EBITDA, etc.) to calculate P/CF ratios. 

When earnings are negative, the P/E ratio is meaningless. 

This question tested from Session 14, Reading 61, LOS a, (Part 1)

 

Question 88 

The correct answer was D) $104 

Infinite period DDM: P₀ = D₁ / (k_e – g) 

D1	= (Earnings × Payout ratio) / average number of shares outstanding
	= ($200,000 × 0.625) / 50,000 = $2.50.
ke	=  risk free rate + [beta × (expected market return – risk free rate)]
ke	=  7.5% + [1.8 × (13.0% - 7.5%)] = 17.4%.
g	=    (retention rate × ROE)
				Retention = (1 – Payout) = 1 – 0.625 = 0.375.
				ROE  = net income/equity
							= 200,000/500,000 = 0.4
g	= 0.375 × 0.4 = 0.15.

 

P₀ = D₁ / (k_e – g) = $2.50 / (0.174 - 0.15) = 104.17. 

This question tested from Session 14, Reading 60, LOS b, (Part 2)

 

Question 89 

The correct answer was D) Major news announcements are grouped together to minimize the market impact of any one announcement. 

An assumption of efficient markets is that new information comes to the market in a random manner and news announcements are timed independently of one another. The other statements are characteristics of efficient markets. 

This question tested from Session 13, Reading 54, LOS a, (Part 1)

 

Question 90 

The correct answer was D) In continuous markets, bids and offers are accumulated and trades take place at a price that clears the market. 

In call markets, all trades, bids, and asks are declared over some period of time, and then one negotiated price is set that clears the market for the stock. In continuous markets, trades occur at any time the market is open. New share issues from firms whose shares are already trading are called seasoned or secondary issues. Origination, risk bearing, and distribution are the three functions performed by an underwriter. After their initial offering in the primary market, securities trade in the secondary market.

This question tested from Session 13, Reading 52, LOS b

 

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