[S1] All corporations which are under liquidation proceedings do not have value

because they do not provide cash flows from operations. [S2] The market value is
always equal to the intrinsic value.
S1 is true.
S2 is true.
both are true.
both are false

The following are manifestations of valuation bias EXCEPT

In the computation of the growth rate of several entities, the analyst computed the arithmetic mean
and the geometric mean. He took the better growth rate average for each entity.
The analyst forgot to deduct the preferred share dividends in computing the free cash flow to the
equity.
Last minute changes were made to the valuation report. Special considerations such as customer
loyalty and political ties were included to increase the value of the firm.
Based on historical buy and sell recommendations, stockbrokers were 60% more likely to issue a buy
recommendation than their investment bank counterparts.

Refers to the process of transforming a major component or segment of a business

into a separate legal entity whose ownership will be transferred to shareholders.
acquisition
divestiture
merger
spin - off

If the intrinsic value of a bond is lesser than its current market value, the investor must
purchase the bond as investment
sell the bond that is currently held as investment
either A or B
answer not given

ABC Co.’s 5-year bond with a face value of P1,000currently sells for P1,150. Which
statements is correct?
The bond’s current yield is equal its yield to maturity.
The bond’s yield to maturity is greater than its coupon rate.
The bond’s current yield is equal to its coupon rate.
none of the above

A 10-year term bond has an annual coupon payment of 9%. The bond is currently
selling at par P1,000 and rate of return is equal to the coupon rate. Which statement is
incorrect?
The bond’s yield to maturity is 9%.
The bond’s current yield is 9%.
If the bond’s selling price remains at par, the bond’s yield to maturity remains constant.
A, B and C.
none of the above.