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FM F Business valuations
Written by Mahnoor Sheikh (ACCA)
7 ACCA Financial Management questions with answers and explanations.
Printable worksheet with answer key
All questions with answers
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Earnings per share are $0.40 and a suitable P/E ratio is 12. What is the share value?
- 1 $30.00
- 2 $0.48
- 3 $3.33
- 4 $4.80
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Correct answer: $4.80
0.40 x 12 = 4.80.
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Which valuation method looks at the value of net assets?
- 1 The P/E method
- 2 The CAPM
- 3 Asset-based valuation
- 4 The dividend valuation model
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Correct answer: Asset-based valuation
It ignores future earnings.
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In the weak form of the efficient market hypothesis, prices reflect:
- 1 All public information
- 2 All information including private
- 3 No information
- 4 Past price information
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Correct answer: Past price information
Technical analysis cannot give extra returns.
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In the semi-strong form, prices reflect:
- 1 All publicly available information
- 2 Only past prices
- 3 Only private information
- 4 No information
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Correct answer: All publicly available information
Fundamental analysis cannot give extra returns.
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Irredeemable debt pays $6 a year and the required yield is 8 percent. What is its value?
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Correct answer: $75
6 / 0.08 = 75.
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Which is a use of a business valuation?
- 1 Deciding a price in an acquisition
- 2 Preparing a payroll
- 3 Counting inventory
- 4 Choosing office furniture
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Correct answer: Deciding a price in an acquisition
Valuations are needed for acquisitions, flotations and disposals.
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Which statement about the EMH is correct?
- 1 Only technical analysis works
- 2 All markets are strong-form efficient
- 3 The strong form says even private information is already in the price
- 4 Prices never change
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Correct answer: The strong form says even private information is already in the price
Evidence suggests that markets are not strong-form efficient.
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