BLOOMBERG EVALUATION EXAM 2026/2027 QUESTIONS
AND SOLUTIONS RATED A+
✔✔A house - ✔✔The purchase of which of the following products is most affected by
interest rates?
✔✔Central bank interest rates - ✔✔What is the primary driver of the left-hand end of the
yield curve?
✔✔An inverted yield curve means that bond traders are predicting interest rate cuts,
and interest rate cuts happen in response to a recession. - ✔✔Why does the yield curve
tend to invert shortly before a recession?
✔✔IPOs incentivize entrepreneurs to innovate as IPOs provide a way for entrepreneurs
to monetize their work. - ✔✔Why do companies do IPOs?
✔✔an IPO crystallizes the value of the manager-owners stake. - ✔✔Why do company
manager-owners smile when they ring the stock exchange bell at their IPO?
✔✔Her mortgage payments and necessities are fixed. - ✔✔What is the prime reason
that Jenny's discretionary income is more volatile than her salary?
✔✔A shareholder in a booming economy. - ✔✔A wedding planning company has a high
fixed-cost base and a lot of debt. Who would you rather be?
✔✔Due to the residual nature of earnings - ✔✔Why are equities volatile?
✔✔When you buy an equity, the most you can lose is 100% and your potential gain is
unlimited. - ✔✔Which of the following statements is true?
✔✔Both are estimated in advance by analysts. - ✔✔What does the release of earnings
announcements have in common with the release of economic indicators?
✔✔A comparison of the commercial prospects of new aircraft models - ✔✔Engines are
the most expensive, heavy component on an aircraft and are designed with detailed
specifications. Which of the following would likely be the best theme for a Rolls-Royce
analyst research note to help a portfolio manager decide between investing in Rolls-
Royce or United Technologies?
✔✔Median age of society - ✔✔You are building a financial model of a bifocal lens
manufacturer. Which of the following is the best driver to use?
, ✔✔Defines the industry or industries in which the company operates. - ✔✔When an
analyst is looking at a company for the first time, which of the following four activities
does he do first?
✔✔There is not enough information to tell. - ✔✔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?
✔✔$100 million - ✔✔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?
✔✔Short-term forecasts - ✔✔What input do both absolute valuation and relative
valuation typically require?
✔✔Future profits are uncertain. - ✔✔What is a reason one discounts future cash flows
as part of the absolute valuation process?
✔✔Enterprise value = market cap - cash + debt - ✔✔How is enterprise value
calculated?
✔✔A fishery exceeding fishing quotas - ✔✔Which of the following assigns the same
relative weightings to short-term and long-term outcomes as the absolute valuation
process?
✔✔Earnings estimates - ✔✔A rise in which of the following inputs will increase an
absolute valuation?
✔✔The cash flow from equities can continue indefinitely while the cash flow from most
bonds comes to an end. - ✔✔how do earnings yields differ from bond yields?
✔✔The estimated growth can be dramatically wrong. - ✔✔What is one possible
weakness of this peer approach to valuation?
✔✔A stock's P/E ratio can remain above or below market average for extended periods.
- ✔✔What may be a problem of comparing the P/E of a stock to the P/E of the overall
market?
✔✔$50.00 - ✔✔If the earnings per share of a company is $1 and the earnings yield is
2%, What is the price per share?
✔✔ Inaccurately because the scope of GDP measurements can change. - ✔✔How
accurately do GDP portray the economy and why?
AND SOLUTIONS RATED A+
✔✔A house - ✔✔The purchase of which of the following products is most affected by
interest rates?
✔✔Central bank interest rates - ✔✔What is the primary driver of the left-hand end of the
yield curve?
✔✔An inverted yield curve means that bond traders are predicting interest rate cuts,
and interest rate cuts happen in response to a recession. - ✔✔Why does the yield curve
tend to invert shortly before a recession?
✔✔IPOs incentivize entrepreneurs to innovate as IPOs provide a way for entrepreneurs
to monetize their work. - ✔✔Why do companies do IPOs?
✔✔an IPO crystallizes the value of the manager-owners stake. - ✔✔Why do company
manager-owners smile when they ring the stock exchange bell at their IPO?
✔✔Her mortgage payments and necessities are fixed. - ✔✔What is the prime reason
that Jenny's discretionary income is more volatile than her salary?
✔✔A shareholder in a booming economy. - ✔✔A wedding planning company has a high
fixed-cost base and a lot of debt. Who would you rather be?
✔✔Due to the residual nature of earnings - ✔✔Why are equities volatile?
✔✔When you buy an equity, the most you can lose is 100% and your potential gain is
unlimited. - ✔✔Which of the following statements is true?
✔✔Both are estimated in advance by analysts. - ✔✔What does the release of earnings
announcements have in common with the release of economic indicators?
✔✔A comparison of the commercial prospects of new aircraft models - ✔✔Engines are
the most expensive, heavy component on an aircraft and are designed with detailed
specifications. Which of the following would likely be the best theme for a Rolls-Royce
analyst research note to help a portfolio manager decide between investing in Rolls-
Royce or United Technologies?
✔✔Median age of society - ✔✔You are building a financial model of a bifocal lens
manufacturer. Which of the following is the best driver to use?
, ✔✔Defines the industry or industries in which the company operates. - ✔✔When an
analyst is looking at a company for the first time, which of the following four activities
does he do first?
✔✔There is not enough information to tell. - ✔✔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?
✔✔$100 million - ✔✔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?
✔✔Short-term forecasts - ✔✔What input do both absolute valuation and relative
valuation typically require?
✔✔Future profits are uncertain. - ✔✔What is a reason one discounts future cash flows
as part of the absolute valuation process?
✔✔Enterprise value = market cap - cash + debt - ✔✔How is enterprise value
calculated?
✔✔A fishery exceeding fishing quotas - ✔✔Which of the following assigns the same
relative weightings to short-term and long-term outcomes as the absolute valuation
process?
✔✔Earnings estimates - ✔✔A rise in which of the following inputs will increase an
absolute valuation?
✔✔The cash flow from equities can continue indefinitely while the cash flow from most
bonds comes to an end. - ✔✔how do earnings yields differ from bond yields?
✔✔The estimated growth can be dramatically wrong. - ✔✔What is one possible
weakness of this peer approach to valuation?
✔✔A stock's P/E ratio can remain above or below market average for extended periods.
- ✔✔What may be a problem of comparing the P/E of a stock to the P/E of the overall
market?
✔✔$50.00 - ✔✔If the earnings per share of a company is $1 and the earnings yield is
2%, What is the price per share?
✔✔ Inaccurately because the scope of GDP measurements can change. - ✔✔How
accurately do GDP portray the economy and why?
