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Quiz 01 VFM.docx

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Quiz 01 (Chapter 1,2,7,8,15) Question 1 Marks: 1 Contingent claim valuation is: Choose one answer. a. To generate cash flows and the risk in the cash flows. In it’s most common form, intrinsic value is computed with a discounted cash flow valuation, with the value of an asset being the present value of expected future cashflows on that asset. DCF b. None of the others c. To use option pricing models to measure the value of assets that share option characteristics. Conti
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  Quiz 01 (Chapter 1,2,7,8,15) Question 1 Marks: 1 Contingent claim valuation is: Choose one answer. a. To generate cash flows and the risk in the cash flows. In it’s  most common form, intrinsic value is computed with a discounted cash flow valuation, with the value of an asset being the present value of expected future cashflows on that asset. DCF  b. None of the others c. To use option pricing models to measure the value of assets that share option characteristics. Contingent claim d. To estimates the value of an asset by looking at the pricing of 'comparable' assets relative to a common variable like earnings, cashflows, book value or sales. Relative valuation Question 2 Marks: 1 In 2012, Vietnamese government had a local currency sovereign rating of B1. The typical default spread (over a default free rate) for B1 rated country bonds in 2012 was 3.5%. If Vietnamese government issue bonds in Vietnam Dong with a yield to maturity is 10% on 2012, what is risk free rate in Vietnam dong? : Risk free rate = Government  –   Default spread Choose one answer. a. 5%  b. 13.5% c. 10% d. 6.5% Question 3 Marks: 1 What would you expect about the beta of a company when it wants to borrow money from the  banks to buy its outstanding shares from the market? Choose one answer. a. Beta will go down  b. Beta will go up c. Beta will not change d. Beta will not be affected Question 4 Marks: 1 If a firm has beta = 1.5, what do you expect about the return of the firm if the market go up 5% ? Choose one answer. a. 7.5%     b. 2.5% c. -7.5% d. 5% Question 5 Marks: 1 Bamboo Solution has a beta of 2 in 2010. Company has 15 million USD in debt and 30 USD million in equity. If the tax rate is 30%, what is the unlevered beta of the company? Choose one answer. Beta / 1+((1-t)*(D/E)) a. 1.48  b. 2 c. 0.93 d. 2.5 Question 6 Marks: 1 What is the true statement of Philosophical Basis of DCF Valuation: Choose one answer. a. Free Cash flow is the basic objects for the company  b. None of the others c. Cash flow is the most important to shareholders d. Every asset has an intrinsic value that can be estimated, based upon its characteristics in terms of cash flows, growth and risk. Question 7 Marks: 1 What is the discounted rate used to valuate the value of FCFE in the DCF models ? Choose one answer. a. WACC  b. Cost of equity c. None of the others d. Cost of capital Question 8 Marks: 1 What would you expect about the beta of a company when it wants to change its cost structure from higher fixed cost to lower fixed cost. Choose one answer. a. Beta will go up  b. Beta will go down    c. Beta will not change d. Beta will not be affected. Question 9 Marks: 1 The company have the capital structure D/E is 4/6 and the cooperate tax is 40%; Cost of equity is 10%; cost of debt is 6%. The weighted average capital cost is :  Choose one answer. a. 6.1%  b. None of the others c. 7.4% d. 8.4% Question 10 Marks: 1 You’re valuing a Vietnamese firm in Vietnam dong. The current exchange rate = 21.000 VND/USD; and you have been able to obtain a ten year forward rate for 28.000 VND/USD. If the U.S treasury bonds rate for 10 year is 5%, estimate the riskless rate for Vietnam dong. Choose one answer. a. 9.2%  b. 7.02% c. 8 .06% d. 6.05% Question 11 Marks: 1 Baker Corp currently has 40 million USD in debt and 100 million USD in equity outstanding. Its stock has a beta of 1.2. It plans use leverage buyout to buy another company and increase its debt/asset ratio to 6/7. If the tax rate is 40%, what will the beta of Baker Corp after acquisition deal? 6.chap 8 Choose one answer. a. 3.4  b. 5.67 c. 2.5 d. 4.45 Question 12 Marks: 1 In the 2012 financial statements of ABC company, we have the following information: Profit after taxes=100; Depreciation=10; Increase in current assets=20; Increase in current liabilities=15; Capital expenditures (CAPEX=increase in fixed assets at cost)=15; After-tax net interest= 10. The free cash flow of ABC in 2012 is:  Choose one answer. a. 80  b. 90 c. 100 d. None of the others Question 13 Marks: 1 You use a valuation model to arrive at a value of 20 USD for a stock. The market price of stock is 25 USD. The difference may be explained by Choose one answer. CHAP 1 PAGE 13. a. D. None of the others  b. B. The use of the wrong valuation model to value the stock c. E. Either A, B, C d. C. Errors in the inputs to the valuation model e. A. A market inefficiency; the market is overvaluing the stock Question 14 Marks: 1 According to implied Risk premium method, if the stock index increase 5% and Treasury bond rate decrease in this period 2%, what will happen to the implied equity risk premium? Choose one answer. a. Implied equity risk premium will not change  b. Implied equity risk premium will increase c. None of the others d. Implied equity risk premium will decrease Question 15 Marks: 1 What statements is true? Choose one answer. a. Relative valuation models works best for investors who either have a long time horizon, allowing the market time to correct its valuation mistakes and for price to revert to “true” value  b. None of the others c. Contingent valuation models works best for investors who either have a long time horizon, allowing the market time to correct its valuation mistakes and for price to revert to “true” value d. Relative valuation models works best for investors who either have a short-term investment, DFC models are suitable for long-term investment investors

Book of Sufi Salat

Jul 22, 2017
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