Business Valuation Quiz

Which valuation approach is not necessarily based on future earnings but also historical costs?

• Discounted Cash Flow (DCF)

• Asset-based valuation

• Relative valuation

If EPS is 2.8 EUR, PE ratio is 9 times than market value per share is __________

• 1.6

• 11.8

• 25.2

• 3.214

The valuation of a common stock today primarily depends on

• the number of shares outstanding and the number of its shareholders.

• its expected future dividends and its discount rate.

• Wall Street analysts.

• the price to earnings ratio.

What will happen to the market value of a bond if interest rates rise?

• market value will decrease

• market value will increase

• Stay the same

• No idea

CK Company stockholders expect to receive a year-end dividend of $5 per share and then immediately sell their shares for $115 dollars per share. If the required rate of return for the stock is 20 percent, what is the current value of the stock?

• $132

• $122

• $100

• $110

What is FCFE?

• Fast Cash for Equity

• Fast Cash Flow to Equilibrium

• Free Cash Formula to Equity

• Free Cash Flow to Equity

A bond which has a yield to maturity greater than its coupon rate will sell for a price

• below par

• at par

• above par

• equal to face value of bond plus the interest payments

What does the Discounted Cash Flow (DCF) valuation consider?

• the time value of money

• historic cost

• comparison of other businesses