Expected holding period increases

Expected holding period decreases

Higher expected cash flow growth

Free CFA Equity Practice Questions & Answers

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Question 271

Permanent price impact is caused by:

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Question 272

A minority discount reflects:

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Question 273

The discount for lack of marketability (DLOM) is highest when:

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Question 274

Estimating beta for private firms is difficult because:

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Question 275

A common solution is to:

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Question 276

DLOM increases when:

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Question 277

Higher volatility:

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Question 278

Private firms often have:

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Question 279

Cash flows of private firms are riskier because:

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Question 280

Size premium is added because:

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Question 281

Illiquidity affects valuation by:

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Question 282

Market efficiency and anomalies You observe a persistent post‑earnings announcement drift (PEAD) in a large, liquid market. Which form of efficiency is directly violated?

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Question 283

Market efficiency and active management In a market that is weak‑form efficient but not semi‑strong efficient, which strategy has the highest potential to generate abnormal returns?

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Question 284

DLOM and volatility For a private firm with highly volatile cash flows and no foreseeable liquidity event, what happens to the discount for lack of marketability (DLOM)?

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Question 285

Market microstructure – informed trading In a quote‑driven market, an increase in informed trading relative to liquidity trading will most likely:

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Question 286

Private vs public discount rates A private firm and a similar public firm have identical business risk and capital structure. Which is most likely about their discount rates?

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Question 287

Market efficiency and limits to arbitrage A clear mispricing persists in a liquid market for months, but exploiting it requires large capital and exposes arbitrageurs to significant interim losses. Which is most accurate?

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Question 288

A stock’s quoted spread is very tight, but depth at the best bid and ask is small due to HFT activity.

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Question 289

Which firm characteristic suggests low persistence?

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Question 290

A firm with RI consistently equal to zero should trade at:

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Question 291

PEG ratio is least reliable when:

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Question 292

P/E (forward)?

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Question 293

P/S ratios is:

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Question 294

A control premium is justified because:

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Question 295

P/E = 20 and growth = 10%. PEG = ?

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Question 296

P/CF?

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Question 297

Which change most likely increases a firm’s justified P/E (forward)?

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Question 298

EV/EBITDA often preferred over P/E for cross‑company comparisons?

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Question 299

Which is the main limitation of the price‑to‑sales ratio?

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Question 300

P/E = 18 and expected growth = 9%. What is the PEG ratio?

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Free CFA Equity Practice Questions & Answers

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