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Course 571004- Valuation: Businesses, Securities and Real Estate
  Final Exam
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571004v - Valuation: Businesses, Securities and Real Estate

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Financial Planning
5 CPE Credit Hours

Final Exam
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Read 'Chapter 1: Corporate Valuations' & answer the following question(s):
1. There are many reasons for determining the value of a company. The reasons for a valuation do NOT include:
2. Tough economic times and economies of scale encourage all the following EXCEPT
3. The estimated rate of capitalization (cost of capital) includes
4. For the dissolution of the business, the company's value might be based on the ___________________ of the company's assets.
5. Business valuation methods do NOT include
6. The discount rate ordinarily used in present value calculations is the
7. The present value of $110,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is: (Note: the present value of $1 at 10% for one period is 0.909).
8. A business is worth the discounted value of future cash earnings plus the discounted value of the expected selling price. Which of the following used this concept?
9. "Earnings surprises” are defined as
10. __________________ is NOT an approach to determining the fundamental value for a security investment.
Read 'Chapter 2: Security and Real Estate Valuation' & answer the following question(s):
11. The valuation process for a bond does NOT require knowledge of
12. Which of the following is directly applied in determining the value of a stock when using the Gordon’s valuation model?
13. Consider a common stock that paid a $3 dividend per share at the end of the last year and is expected to pay a cash dividend every year at a growth rate of 10 percent. Assume the investor's required rate of return is 12 percent. The value of the stock would be
14. A beta of “0” means
15. Price-earnings ratio is NOT affected by
16. The capitalization of earnings method is based on the _______________ assumption.
17. A measure of a security's volatility relative to an average security is
18. Forecasted price at the end of year is
19. Assume that required rate of return stay the same but that the future dividends are expected to grow over the long run. As a result of the growth in dividends, the company’s stock price should
20. The market value of a firm’s outstanding common shares will be higher if
21. By using the dividend growth model, estimate the value of the stock for a firm with a required rate of 20%, an estimated dividend at the end of the first year of $3.00 per share, and an expected growth rate of 10%.
22. The difference between the required rate of return on a given risky investment and that on a riskless investment with the same expected return is the
23. ______________________ is NOT considered a pragmatic approach to common stock valuation.
24. The market portfolio, such as Standard & Poor’s 500, has a beta of ____.
25. The ___________________________ method uses the present value technique under which the asking price or value of a real estate investment is the present worth of the future after-tax cash flows from the investment, discounted at the rate of return required by the investor.
26. _________________ is NOT a rule-of-thumb method to arrive at the estimated value of an income producing property.
27. Certain terms used in real estate investments have applications similar to those used in security analysis. For example, the price earnings (P/E) ratio found in the analysis of stocks is equivalent to _____________ in real estate investment analysis.
28. Which of the following is equal to before-tax cash flow from operations?
29. Calculate the capitalization rate for the following investment: Net operating income (NOI) = $18,750; Purchase price = $150,000; Equity = 20%
30. The capitalization rate is
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