Answer the following multiple-choice questions:
Required
a. Which of the following would not be an example of the use of a multiple when valuing common equity?
1. Multi-period discounted earnings models
2. Price-to-earnings (PE)
3. Price-to-book
4. Price-to-operating cash flow
b. The two most popular discounted earnings models appear to be
1. Discounted abnormal earnings and residual income.
2. Free cash flow and dividend discount model.
3. Sales/market capitalization and price-earnings.
4. Price-cash flow and dividend discount.
c. Shareholders of acquired companies are often big winners, receiving on average a premium of what in a friendly merger?
1. 10%
2. 20%
3. 30%
4. 35%
d. Which of the following was not given as a reason for acquirers paying too much in an acquisition?
1. Overuse of conventional financial statements
2. Overbidding
3. Overoptimistic appraisal of market potential
4. Overestimation of synergies
e. Which of the following would likely be very useful when valuing a dot.com?
1. Discounted cash flow
2. Price-earnings
3. Net asset value
4. Dividend yield