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Free Questions › CFA › Corporate Issuers
Free CFA Corporate Issuers Practice Questions & Answers
900 exam-style Corporate Issuers questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 451
A company using the equity method reports:
Select an option first.
Correct answer: B — Its share of the investee’s net income
Explanation: B is right: equity method recognizes share of net income. A is cash flow only. C is consolidation. D incorrect.
Question 452
A joint venture typically involves:
Select an option first.
Correct answer: B — Shared ownership and shared risks
Explanation: B is right: joint ventures share control and risk. A is an acquisition. C often false. D incorrect.
Question 453
Which increases enterprise value (EV), holding everything else constant?
Select an option first.
Correct answer: C — Higher operating income
Explanation: C is right: EV is driven by operating performance. A reduces EV. B reduces EV. D irrelevant.
Question 454
Which is a reason to use valuation multiples?
Select an option first.
Correct answer: B — They allow quick relative comparisons
Explanation: B is right: multiples are fast comparison tools. A, C, D incorrect.
Question 455
Which is a typical motivation for an acquisition?
Select an option first.
Correct answer: B — Achieve cost synergies
Explanation: B is right: cost synergies are common. A, C, D incorrect.
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Question 456
A company’s enterprise value decreases when:
Select an option first.
Correct answer: B — Cash increases
Explanation: B is right: EV = equity + debt – cash. A, C, D increase EV.
Question 457
Which item reduces enterprise value (EV)?
Select an option first.
Correct answer: B — Higher cash balance
Explanation: B reduces EV because EV subtracts cash. A, C, D increase EV.
Question 458
Which is a typical reason for an acquisition?
Select an option first.
Correct answer: B — Gain access to new markets
Explanation: B is a common strategic motive. A, C, D are not.
Question 459
A company’s valuation multiple (e.g., P/E) increases when:
Select an option first.
Correct answer: A — Expected growth rises
Explanation: A raises valuation multiples. B, C, D lower them.
Question 460
Which is a benefit of a joint venture?
Select an option first.
Correct answer: B — Shared risk and shared expertise
Explanation: B is the core advantage. A, C, D incorrect.
Question 461
A company’s valuation using EV/EBITDA decreases when:
Select an option first.
Correct answer: A — EBITDA rises
Explanation: A lowers the multiple. B, C, D increase EV or numerator.
Question 462
A company’s valuation multiple (e.g., EV/EBITDA) increases when:
Select an option first.
Correct answer: D — All of the above
Explanation: D is right: all three raise valuation multiples.
Question 463
Which is a typical reason for a merger?
Select an option first.
Correct answer: B — Achieve cost efficiencies
Explanation: B is a common motive. A, C, D are not.
Question 464
Which is a benefit of using valuation multiples?
Select an option first.
Correct answer: B — They allow quick comparisons
Explanation: B is the main advantage. A, C, D incorrect.
Question 465
A company’s valuation using P/E decreases when:
Select an option first.
Correct answer: B — Risk rises
Explanation: B lowers valuation multiples. A, C, D increase them.
Question 466
A company’s valuation multiple (e.g., P/E) decreases when:
Select an option first.
Correct answer: A — Growth expectations fall
Explanation: A lowers valuation multiples. B, C, D increase them.
Question 467
A company’s valuation using EV/EBITDA increases when:
Select an option first.
Correct answer: A — EBITDA falls
Explanation: A increases the multiple (lower denominator). B, C, D reduce EV or numerator.
Question 468
Which factor reduces enterprise value (EV)?
Select an option first.
Correct answer: C — Higher cash
Explanation: C reduces EV because EV subtracts cash. A, B, D increase EV.
Question 469
Which factor most likely reduces a company’s valuation multiple?
Select an option first.
Correct answer: B — Higher uncertainty in future cash flows
Explanation: B: Higher uncertainty → lower multiples. A, C, D increase multiples.
Question 470
Which action increases enterprise value the most?
Select an option first.
Correct answer: B — Increasing operating margins
Explanation: B: Higher margins → higher operating value → higher EV. A reduces EV. C reduces EV. D does not directly increase EV.
Question 471
A company’s valuation using EV/EBITDA may fall even if EBITDA is unchanged when:
Select an option first.
Correct answer: B — Market value of equity falls
Explanation: B: Lower equity value → lower EV → lower multiple. A, C increase EV. D increases EBITDA, not EV.
Question 472
A company’s enterprise value may rise even if market cap falls when:
Select an option first.
Correct answer: B — Debt increases
Explanation: B: Higher debt increases EV. A reduces EV. C, D reduce EV.
Question 473
A company’s valuation multiple may rise even if earnings fall when:
Select an option first.
Correct answer: A — Expected long‑term growth increases
Explanation: A: Higher growth expectations can outweigh short‑term earnings declines. B, C, D reduce multiples.
Question 474
A company’s enterprise value may fall even if operating income rises when:
Select an option first.
Correct answer: A — Cash increases significantly
Explanation: A reduces EV because EV subtracts cash. B, C, D increase EV.
Question 475
A company’s valuation using EV/EBITDA may rise even if EV is unchanged when:
Select an option first.
Correct answer: A — EBITDA falls
Explanation: A increases the multiple (lower denominator). B lowers the multiple. C, D reduce EV.
Question 476
A company’s enterprise value may rise even if EBITDA falls when:
Select an option first.
Correct answer: A — Debt increases significantly
Explanation: A: Higher debt increases EV regardless of EBITDA. B reduces EV. C, D reduce EV.
Question 477
A company’s valuation multiple may rise even if risk increases when:
Select an option first.
Correct answer: A — Long‑term growth expectations rise sharply
Explanation: A: Growth can dominate risk in valuation. B, C, D reduce multiples.
Question 478
Which factor most likely reduces enterprise value?
Select an option first.
Correct answer: B — Higher cash balances
Explanation: B reduces EV because EV subtracts cash. A, C, D increase EV.
Question 479
A company’s valuation using EV/EBITDA may fall even if EBITDA rises when:
Select an option first.
Correct answer: A — Debt decreases
Explanation: A reduces EV → lower multiple. B, C, D increase EV or EBITDA.
Question 480
A company’s enterprise value may rise even if market cap falls when:
Select an option first.
Correct answer: A — Debt increases
Explanation: A increases EV. B reduces EV. C, D reduce EV.
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