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Q.1 When using the guideline public company method, at what point in time are the prices of the public companies’ stock valued?
A.
A. 30-day average
B.
B. As of valuation date
C.
C. Six-month average
2.
Q2. Which of the method are considered valid under the income approach?
A.
A. Guideline public company method
B.
B. Discounted cash flow method and capitalized cash flow method
C.
C. Excess cash flow method and Capitalized cash flow method
3.
Q3. Which of the following is a long-term asset?
A.
A. Goodwill
B.
B. Accounts payable
C.
C. Accounts receivable
4.
Q4. Which of the following are commonly sensitized key variables in the DCF?
I. WACC
II. Exit multiple
III. IRR
IV. EBIT margins
A.
A. I and III
B.
B. II and III
C.
C. I, II, and IV
5.
Q5. Which one of the following is considered a weakness of the DCF?
A.
A. Market independent
B.
B. Terminal value represents a large portion of the total value
C.
C. Can handle multiple financial performance scenarios
6.
Q6. Who makes the decision about the preferred financing structure for a particular LBO?
A.
A. Target company
B.
B. Sponsor
C.
C. Investment Bank
7.
Q7. What is typically the primary source for the Management Case financial projections that are used in the LBO model during an organized merger and acquisition sale process?
A.
A. Comparable company’s analysis
B.
B. Research estimates
C.
C. CIM
8.
Q8. Which of two economic indicators are probably the most important in valuation?
A.
A. Unemployment levels and gross domestic product (GDP)
B.
B. Inflation and unemployment levels
C.
C. GDP and inflation
9.
Q9. How long is the typical DCF projection period?
A.
A. 1 year
B.
B. 3 years
C.
C. 5 years
10.
Q10. Which of the following is a current asset?
A.
A. Goodwill
B.
B. Property, plant and equipment
C.
C. Prepaid expenses
11.
Q11. An increase in inventory is?
A.
A. A use of cash
B.
B. A source of cash
C.
C. No change in cash
12.
Q12. Which of the following sectors should have the lowest beta?
A.
A. Technology
B.
B. Utility
C.
C. Chemicals
13.
Q13. An investment bank's financing commitment does not include, among other things, which of the following?
A.
A. Commitment letter
B.
B. Institutional letter
C.
C. Engagement and Fee letter
14.
Q14. What is the significance of capital expenditure projections in an LBO analysis?
A.
A. Assists prospective buyers in determining their investment time horizon.
B.
B. Capital expenditures represent a use of cash that reduces free cash flow.
C.
C. Buyers prefer companies that have a high level of maintenance capital expenditure.
15.
Q15. What exactly is a cash flow sweep in the context of an LBO?
A.
A. Following the completion of mandatory debt repayments, all cash generated by the target is applied to the optional repayment of outstanding prepayable debt.
B.
B. Following the payment of mandatory debt repayments, the target uses all of the cash generated to pay dividends.
C.
C. Three financial statements that are linked together
Quiz Outcomes
1.
Result 1
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