Ss Se Value pertains to how much a p 2. Methods to value for real estate can may be different on how to value an entire business. 3, Businesses treat capital as a scarce\resource that they should’compete to obtain and efficiently manage. 4. According to the CFA Institute, valuation is the estimation of an asset's value based on variables perceivedto be related to future-investment returns, on or, when relevant, on compari cstimates of immediate liquidation proceeds. 5. Valuation includes the use of to come up with ya actos netusinasotaerenterasZere o its equity. %. Valuation techniques may differ across different assets, but all follows’similar fundamental principles that drives the core of these approaches. 7. As valuation mostly deals muy projections about ee of th assess 5s validity of available empirical evidence and come up with rational choices that aligns with the ultimate objective of the valuation activity. In the ‘Corporate setting, the fundamental equation of value is grounded on the principle that AlfrediMarshai! popularized — a company creates value ifand only if the.return.on.capital inves acquiring capital. “~ © 9. ‘Value, in the point of view of corporate shareholders, relates to the difference between cash inflows 10. ‘ntrinsicovaluerrefers to the value of any asset based on the assumption assuming therelisya hypothetically complete ‘Understanding ofits investment ‘Scanne wih CamScanetvalue Is uetenimeu Under the —W aoe amtion. The going concern | going concern jeves that the entity-willicontinuaitg = assumption BI loves trio the foreseeable future busines ae js the net amount that would:be au ation eines is terminated and the assets ized if id piecemeal | “jr Market eri ih property would change | h equiva on Fs hypothetical willing and able buyer | ds Seal willing and able seller, acting at | a ee in an open and unrestricted market, when amm’s leng nder compulsion to buy or selland when ee cacenci knowledge of the relevant facts. a analysts are persons who are interested in understanding and measuring the intrinsic Value of a 15, ermemeued refer to the characteristics of an entity | related to its financial strength, profitability ortisk appetite. | - | 16. Activities investors usually do “takeovers” — they use their equity holdings to push old management outof | the company and change the way the company is i being run. leet Chartists relies on the concept that Stock prices are” significantly influenced by how investors think Chartists rely on availab| i IS Such as movements, trading volume, short sales when making their investment decisions, Going CO! are sol that information '9.0r getting new Can make predict how IS. Adeptin.guessin out firms and they feact based o arties: the buying firm) ™ Neds to . company priorto. describes the fom a wholly ‘Scanne wih CamScanetDivestiture is the ; 5 the nale of a majore Dwvoattarars ‘ajOr, component.c pegmONtof a business (6.9. brand cy eee eOe another.company Cees) Spin-olfis separating a se OF Componie ; ! apare @segmeant or component business and transforming this into a separate entity whose ownership.w sferredty , ship will be transferred shareholders fansteredte \ Leveraged buyout! \ a a tho acquisition of another | jnificant debt which uses the | lateral. more efficient \ operations, cost reductions, increased revenues, combined products/markets or cross-disciplinary \ he combined organization. \ Corporate:finance mainly involves managing the:firm’s capital structure, including funding sources and stfategies that the business should pursue to maximize firm value. | 27. Valuations also important to businesses because of legal and tax purposes. Top-down.forecasting approach — Forecast starts'from international or national macroeconomic projections with utmost consideration tovindustry,specific forecasts. 28. Bottom-up forecasting approach — Forecast starts from the lower.levels. of the firm-and:bu ds the forecast as it captures what will happen to the company. 29. Sensitivity analysis is the common methodology in valuation exercises wherein, multiple other-analyses are.done-to. understand. how.changes.inan inputor variable will affect the outcome (i.e. firm. value). 30. Uncertainty is captured in valuation models through cost of capital or discount rate. 31, Uncertainty is captured in valuation models through cost of capital or discountrate. 32. Valuation isithe estimation of an asset's value based on variables perceived to be related {AU a investment returns,.On, comparisons with Sania? assets, or, when relevant,.on estimates ofl! 33. liquidation proceeds. —— ont Definition of value may vary depending oe’, Different definitions of value include intrinst iquidatis fair-mat going,concem value, liquidation va ,and value, wu ‘Scanne wih CamScanet34. Valuation plays s' wth respect to portfolioimaniagement, nance, legaland tax 35. Generally, valuation process involves these five ae L of the business, forecasting financia | performance, selecting right valuation model, preparing: valuation model based on forecasts and applying: conclusions and providing recommendations 36. Value is defined at a specific pointinitime: 37. Value varies based on ability of business to generate future cash flows 38. Market 39. Value is influenced by tr rama ansterablity of ure coc eomveluel| = impact by Heuidiy —____]NEST Tepsreeey 5 ULTIPLE CHOICE THEORY. Write the tetter of th : e Ml 4 the number of the question or statement being ansn er best answer before Vo red. 1,__41_____ pertains to hi a particular set of eyes. a. Price ob. Value c. Cost d. Fundamentals 101 Ww much a particular object is worth to 2. a ae pete : 2 is the estimation of an jue base iables perceived ne future investment returns, on comparcone wih ates eae when relevant, on estimates of immediate liquidation procescs. Jae Valuation : b. Price Estimation c. Fundamentals d. Appraisal 3. Valuation places great emphasis on the that are associated in the exercise. rofessional judgment b. Human reasoning c. Professional Skepticism d. Due diligence 4. The value of a businesses can be basically linked to three major factors, except : a. Current Operations b. Future Prospects c. Embedded Risks “dNAIl of the above om, ‘ed to the value of business that shows of the firm in the ecer 5. One major factors link’ how is the operating performance Pere Operations . Future Prospects c. Embedded Risks d. Alll of the above io. | ‘Scanne wih CamScanetinked to the value of business that refle pia the BHR and strategic decision of the company a. Current Operations ¢beFuture Prospet c, Embedded Ri d, All of the above 7. One major factors linked to the value of business that what are the busi risks involved in running the busin: a, Current Operations b, Future Prospects “Embedded Risks d. All of the above shows, ess 8. refers to the value of any asset based on the assumption assuming there is a understandingjof its investment characteristics, a. Going concern value b. Liquidation Value sceintrinsic Value “ d. Fair Market Value 9. experiencing a. Going concern value ‘ iquidation Value c. Intrinsic Value d. Fair Market Value particularly relevant for companies who are 10. Value is determined under the going:concer-assumptio: . “aiGoing concern value b. Liquidation Value c. Intrinsic Value 4. Fair Market Value 11.The price, Property would chan, le buyer and a hy; arm’s length in an oj at which 9@ hands between a hypothetical willing ne Pothetical willing and able seller, acting at Pen and unrestricted market, whenneitheris a. Going concern value ‘Scanne wih CamScanetVALUATION CONCEPTS AND METHODOLOGIES b. Liquidation Value c. Intrinsic Value adeFair Market Value 42, The relevance of valuation in larg —________ largely depends:on the investment objectives of the investors.or financial managers managing the investment portfolio. _ a: Portfolio Management b. Fundamental Management ¢. Financial Management d. Investment Management 13. These are persons who are interested in understanding and measuring the intrinsic:value-of-a firm. ~avFundamental Analysts b. Activist Investors c. Chartists d. Information Traders 14, refer to the characteristics of an entity related to_ its financial ig is a. Intrinsic Value poFundamentals ¢. Technical Characteristics d. Financial Value 15. tend to look for companies with good growth, prospects that have a. Fundamental Analysts pKativist Investors c. Chartists d. Information Traders 46. They believe that these metrics imply investor"paychology and will predict future movements in stock prices. a. Fundamental Analysts ~ — b. Activist Investors soChartists d. Information Traders Bey ‘Scanne wih CamScaneta are more adept in by bout firms and they can Make ‘ASE on this, Hence, NOW information will affect this Undamenta| t | 5. Activig Analysis cc te NVestors hartists ode Information Traders 18. Under ement, the following activities canbe Performeart roug uation techniques, except a. Stock Selection b. Deducing Market Expectation ‘Sef Both can be performed d. None of the above 19. or component business and transforming ee earn ownership will be transferred to shareholders. a. Mergers b. Acquisitions c, Divestiture Ya"Spin-off 7 20. Sale of a majoricomponentonsegment of'a business (e.g brand or product line) toranother company a. Mergers b. Acquisitions ivestiture d. Spin-off 21. General term which describes the transaction two companies combined to form a'wholly new-entity aeMergers * b. Acquisitions c. Divestiture d. Spin-off ‘Scanne wih CamScanetCZseL ND METHODOLOGIES 22 Isually has twovparties: the ling firm. The buying firm needs to determna meter and the target company prior to offering a bid price. On the og aU? OF the selling firm (or sometimes, the target company) shone hand, the sense of its firm value as woll to gauge reasonableness oY? 2 offers. 1885 Of bid a, Mergers “be Acquisitions c. Divestiture d. Spin-off 23. Aequisition’of anothenbusiness by using significant'debt winich uses the acquired business as a:collateral a. Mergers b. Acquisitions c. Divestiture cdeLeveraged buy-out ing eg 24. assumes that the combined:value’6f two firms’ will, parate firms an be attributable to more efficient operations, cost reductions, increased revenues, combined products/markets or cross-disciplinary talents of the combined organization vasSynergy b. Control c. Synergy and Control ° d. None of the above 25. deals with prioritizing:and distributing:financial fesources to,activities:thatincreases firm value. The ultimate goal is to maximize'the'firm:valuerby appropriate planning and implementation of resources, while balancing profitability and risk appetite. a. Financial Management =b2@orporate Finance c. Risk Management d. Portfolio Management 26. Generally, the valuation process considers these steps, except a. Understanding'the Business b. Forecasting Financial Performance d. Preparing Valuation model based on forecasts ti: 2 ‘Scanne wih CamScanet[NTT ancl d. All of the above 7 Which key principles in valuation refers to BUSINESS value tend 88 Is defined only ata'specitiopointin, “aeThe value of a business time: b. Value varies based on the ability of business to generate future cash flov - ¢. Firm value can be impacted by underlying net tangible assets di. Market dictates the appropriate rate of return for investors refers to the possible:range.of values, where the a. risk of the unknown b. volatility S@euncertainty d. None of the above key principles in velusten refers eo Market forces’are he: lat 29. Which ket? 7 2. The value of a business is defined only at a specific point in time b. Value varies based on the ability of business to generate future cash flows c. Firm value can be impacted by underlying net tangible assets sdeMarket dictates the appropriate rate of return for investors 30. Which key principles in valuation refers to general concepts for most valuation techniques put’emphasis:on future\cashiflows here value canbe better denives fro} ? a. The value of a business is defined only at a specific point in time / “bi Valué varies based on the ability of business to generate future cash flows c. Firm value can be impacted b’ assets ; d. Market dictates the appropriate rate of return for inves! yy underlying net tangible lors er ‘Scanne wih CamScanet