Financial Modelling And Valuation Test Part 4

Quiz Questions

• 1.
  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

  Dear Test TakerThank you for taking test on analystinterview.comif you have any query and suggestions please write us on info@analystinterview.com