FM F Business valuations

Written by Mahnoor Sheikh (ACCA)

ACCA · Financial Management · 7 questions

Name: ____________________ Date: ____________

Earnings per share are $0.40 and a suitable P/E ratio is 12. What is the share value?
- A $30.00
- B $0.48
- C $3.33
- D $4.80
Which valuation method looks at the value of net assets?
- A The P/E method
- B The CAPM
- C Asset-based valuation
- D The dividend valuation model
In the weak form of the efficient market hypothesis, prices reflect:
- A All public information
- B All information including private
- C No information
- D Past price information
In the semi-strong form, prices reflect:
- A All publicly available information
- B Only past prices
- C Only private information
- D No information
Irredeemable debt pays $6 a year and the required yield is 8 percent. What is its value?
- A $48
- B $80
- C $6
- D $75
Which is a use of a business valuation?
- A Deciding a price in an acquisition
- B Preparing a payroll
- C Counting inventory
- D Choosing office furniture
Which statement about the EMH is correct?
- A Only technical analysis works
- B All markets are strong-form efficient
- C The strong form says even private information is already in the price
- D Prices never change

Answer key

1. D, 2. C, 3. D, 4. A, 5. D, 6. A, 7. C