BMC CORRECT FINAL EXAMS ALL QUESTIONS AND
ANSWERS SURE A+
✔✔When an analyst is looking at a company for the first time, which of the following
four activities does he do first? - ✔✔Defines the industry or industries in which the
company operates.
✔✔Here is a table from the Bloomberg Intelligence copper dashboard which shows the
different end-users of the "red metal.".... - ✔✔China's construction of....
✔✔Here is a breakdown of post-it note inventor 3M's revenue by industry. Which of the
following industry drivers.... - ✔✔The change in postal Volumes
✔✔Company X was expected to have earnings per share of $0.52 for the upcoming
quarter. On the day of the results, the company reported earnings per share of $0.83.
What happened to the share price when the stock market opened? - ✔✔There is not
enough information to tell.
✔✔Which company is worth more, Coca-Cola or Pepsi? - ✔✔Coca-Cola because it has
a higher market capitalization
✔✔Widget Co has a market capitalization of $100 million. it does a 10-for-1 stock split. it
then does a 1-for-16 reverse stock split. Finally, it does a 35-for-1 stock split. Nothing
else changes. what's the new market cap? - ✔✔$100 million
✔✔What input do both absolute valuation and relative valuation typically require? -
✔✔Short-term forecasts
✔✔Which of the following is most likely to be the most challenging part of this first step
of the absolute valuation process? - ✔✔Making the assumptions upon which the project
future performance
, ✔✔What is a reason one discounts future cash flows as part of the absolute valuation
process? - ✔✔Future profits are uncertain.
✔✔What role does beta play in absolute valuation> - ✔✔It determines how risky a stock
is in comparison to the overall stock market
✔✔Here is the capital structure of Microsoft. What part of the $42.03 share price (to the
nearest dollar) is represented by cash? - ✔✔$11
✔✔How is enterprise value calculated? - ✔✔Enterprise value = market cap - cash +
debt
✔✔Which of the following stocks is most sensitive to the movement of the overall stock?
- ✔✔Amazon
✔✔Which of the following assigns the same relative weightings to short-term and long-
term outcomes as the absolute valuation process? - ✔✔A fishery exceeding fishing
quotas
✔✔Here is the WACC function for US drug company Pfizer....What is the WACC? -
✔✔8.2%
✔✔A rise in which of the following inputs will increase an absolute valuation? -
✔✔Earnings estimates
✔✔how do earnings yields differ from bond yields? - ✔✔The cash flow from equities can
continue indefinitely while the cash flow from most bonds comes to an end.
✔✔At its peak at the end of 1999, Microsoft has a market cap of $600B. PC sales were
booming and most PCs ran on Microsoft software..... - ✔✔The decline in P/E ratio more
than offset earning growth and this pushed the market cap down
✔✔What is one possible weakness of this peer approach to valuation? - ✔✔The
estimated growth can be dramatically wrong.
✔✔What may be a problem of comparing the P/E of a stock to the P/E of the overall
market? - ✔✔A stock's P/E ratio can remain above or below market average for
extended periods.
✔✔Here is a chart of the Nasdaq Composite, the world's main technology index. It
peaked in the dotcom bubble on March 10, 2000. The P/E.... - ✔✔Earnings grew
substantially, meaning that the P/E ratio in early 2015 was only around 30.3x
ANSWERS SURE A+
✔✔When an analyst is looking at a company for the first time, which of the following
four activities does he do first? - ✔✔Defines the industry or industries in which the
company operates.
✔✔Here is a table from the Bloomberg Intelligence copper dashboard which shows the
different end-users of the "red metal.".... - ✔✔China's construction of....
✔✔Here is a breakdown of post-it note inventor 3M's revenue by industry. Which of the
following industry drivers.... - ✔✔The change in postal Volumes
✔✔Company X was expected to have earnings per share of $0.52 for the upcoming
quarter. On the day of the results, the company reported earnings per share of $0.83.
What happened to the share price when the stock market opened? - ✔✔There is not
enough information to tell.
✔✔Which company is worth more, Coca-Cola or Pepsi? - ✔✔Coca-Cola because it has
a higher market capitalization
✔✔Widget Co has a market capitalization of $100 million. it does a 10-for-1 stock split. it
then does a 1-for-16 reverse stock split. Finally, it does a 35-for-1 stock split. Nothing
else changes. what's the new market cap? - ✔✔$100 million
✔✔What input do both absolute valuation and relative valuation typically require? -
✔✔Short-term forecasts
✔✔Which of the following is most likely to be the most challenging part of this first step
of the absolute valuation process? - ✔✔Making the assumptions upon which the project
future performance
, ✔✔What is a reason one discounts future cash flows as part of the absolute valuation
process? - ✔✔Future profits are uncertain.
✔✔What role does beta play in absolute valuation> - ✔✔It determines how risky a stock
is in comparison to the overall stock market
✔✔Here is the capital structure of Microsoft. What part of the $42.03 share price (to the
nearest dollar) is represented by cash? - ✔✔$11
✔✔How is enterprise value calculated? - ✔✔Enterprise value = market cap - cash +
debt
✔✔Which of the following stocks is most sensitive to the movement of the overall stock?
- ✔✔Amazon
✔✔Which of the following assigns the same relative weightings to short-term and long-
term outcomes as the absolute valuation process? - ✔✔A fishery exceeding fishing
quotas
✔✔Here is the WACC function for US drug company Pfizer....What is the WACC? -
✔✔8.2%
✔✔A rise in which of the following inputs will increase an absolute valuation? -
✔✔Earnings estimates
✔✔how do earnings yields differ from bond yields? - ✔✔The cash flow from equities can
continue indefinitely while the cash flow from most bonds comes to an end.
✔✔At its peak at the end of 1999, Microsoft has a market cap of $600B. PC sales were
booming and most PCs ran on Microsoft software..... - ✔✔The decline in P/E ratio more
than offset earning growth and this pushed the market cap down
✔✔What is one possible weakness of this peer approach to valuation? - ✔✔The
estimated growth can be dramatically wrong.
✔✔What may be a problem of comparing the P/E of a stock to the P/E of the overall
market? - ✔✔A stock's P/E ratio can remain above or below market average for
extended periods.
✔✔Here is a chart of the Nasdaq Composite, the world's main technology index. It
peaked in the dotcom bubble on March 10, 2000. The P/E.... - ✔✔Earnings grew
substantially, meaning that the P/E ratio in early 2015 was only around 30.3x
