L1 Practice Questions for you investor, sufficient, company, method

edgeon

I'll post answers after sufficient responses:

---------------------------------------------

1) Both IFRS & FASB encourage the use of which method to report cash flow from operations?

A) Direct Method
B) Indirect Method
C) There is no preferred format under both US GAAP & IFRS


2) Bank Overdrafts is considered part of:

A) Cash Equivalents under IFRS, but not US GAAP
B) Cash Equivalents under both
C) Cash Equivalents under GAAP, but not IFRS.


3) An investor worried that a company may go bankrupt would most likely examine its

A) Current Ratio
B) Return on Equity
C) Debt-to-Equity Ratio


4) Distinguishing between current and noncurrent items on the balance sheet an presenting a subtotal for current assets and liabilities is referred to as:

A) the report format
B) the account format
C) a classified balance sheet


5) The initial measurement of goodwill is:

A) not subject to management discretion
B) based on an acquisition's purchase price
C) based on the acquired company's book value


6) The carrying value of inventories reflects:

A) their original cost
B) their current value
C) the lower of original cost or net realized value


7) All else equal, impairment write-downs of long-lived assets owned by a company will most likely result in an increase for that company in

A) the debt-to-equity ratio but not the total asset turnover
B) the total debt turnover but not the debt-to-equity ratio
C) both the debt-to-equity ratio and the total asset turnover


8) A firm has an expected dividend payout ratio of 60%, a required rate of return of 11%, and an expected dividend growth rate of 5%. If you expect next year's earnings (E1) to be $3.50, what is the value of the stock today?

A) $35.00
B) $58.33
C) $17.50


9) Using the information above, calculate the firm's expected P/E ratio

A) 10
B) 6
C) 5


10) Personal Advisers, Inc., has determined four possible economic scenarios and has projected the portfolio returns for two portfolios for their client under each scenario. Personal’s economist has estimated the probability of each scenario as shown in the table below.

Given this information, what is the covariance of the returns on Portfolio A and Portfolio B?

Scenario Probability Return on Portfolio A Return on Portfolio B

A 15% 18% 19%

B 20% 17% 18%

C 25% 11% 10%

D 40% 7% 9%


A) 0.001898.

B) 0.890223.

C) 0.002019

mamuka12

Think I flunted real bad but...here
1.C
2.A
3.C
4.A
5.B
6.C
7.C
8.A
9.A
10.Didnt quite understand the question.

Houjichasan

Baycap - answered 70% correctly.

needhelp1700

1. A
2. C
3. A
4. C
5. B
6. A
7. C
8. A
9. A
10. ???? I got .0789 which is not an answer choice

ohai

1.a
2.a
3.c
4.b
5.b
6.c
7.c
8.a
9.a
10???