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Free CFA Equity Practice Questions & Answers

400 exam-style Equity questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 361

P/E A steel producer has highly cyclical earnings. An analyst uses a single‑year P/E based on peak‑cycle earnings to value the stock. Question 4: What is the most likely bias?

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Question 362

Vignette – Asset‑heavy vs asset‑light Two firms have identical EBITDA and EV/EBITDA multiples. Firm X is asset‑heavy with high capex; Firm Y is asset‑light with low capex. Question 10: Which is most likely?

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Question 363

Vignette – IPO lock‑up expiration A recently listed firm has insiders locked up for 180 days. You value it using public comparables without any adjustment. Question 12: Which is most likely understated?

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Question 364

P/E. Firm A has higher expected growth and higher risk; Firm B has lower growth and lower risk. Question 14: Which is most likely?

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Question 365

Vignette – EV/EBITDA and tax shields Two firms have identical EV/EBITDA. Firm X is unlevered; Firm Y is highly levered with large interest tax shields. Question 18: Which is most likely?

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Question 366

Vignette – EV/EBITDA and restructuring A firm is undergoing a major restructuring that will permanently reduce SG&A expenses. Current EBITDA is depressed. Question 22: Using current EV/EBITDA to value the firm will most likely:

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Question 367

Vignette – P/S vs margins Two retailers have identical P/S ratios. Firm A has operating margin of 3%; Firm B has margin of 8%. Question 24: Which is most likely?

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Question 368

SaaS firm has excellent public comparables with similar growth, margins, and risk. Cash flows are hard to forecast due to rapid product changes. Question 26: Which approach is most practical?

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Question 369

Vignette – Equity carve‑out A conglomerate spins off a high‑growth division as a separate listed entity. The division previously received limited capital. Question 27: Post‑spin, which is most likely for the division’s justified P/E?

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Question 370

A firm’s historical growth has come almost entirely from acquisitions funded with equity. Management claims this justifies a high P/E. Question 29: Which is the most appropriate analytical response?

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Question 371

A stock has annual abnormal returns of 3%, −2%, 4%, and −1% over four years. What is the average abnormal return?

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Question 372

An investor anchors on a stock’s old price of 80. New intrinsic value = 95. If she adjusts only 40% toward new info, what is her biased estimate?

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Question 373

A PE fund invests 50M and exits at 120M after 6 years. IRR?

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Question 374

A VC fund invests 10M for 25% ownership. Exit valuation = 80M. Gross multiple?

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Question 375

A PE fund charges 2% mgmt fee on committed capital of 200M and 20% carry above 8% hurdle. If fund returns 12%, what is carry?

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Question 376

A stock reacts 60% to earnings news on day 1 and 40% on day 2. What anomaly is this?

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Question 377

A PE deal uses 60% debt at 8% and 40% equity. EBITDA = 30M. Interest = 12M. Interest coverage?

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Question 378

A VC firm invests 5M for 10% stake. Post‑money valuation?

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Question 379

A PE fund has DPI = 0.8 and RVPI = 0.6. TVPI?

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Question 380

A stock has beta drift due to representativeness bias. Expected return = 10%, actual = 7%. Behavioral loss?

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Question 381

A firm has P/E = 18, EPS = 4. Price?

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Question 382

EV/EBITDA = 10×, EBITDA = 120M, Net debt = 300M. Equity value?

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Question 383

A firm trades at P/B = 1.8. BVPS = 25. Price?

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Question 384

Comparable P/S = 3×. Firm revenue = 500M. Shares = 50M. Price per share?

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Question 385

EV/Sales = 2.5×, Sales = 800M, Net debt = 200M. Equity value?

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Question 386

PEG ratio: P/E=20, growth=8%. PEG?

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Question 387

A firm has ROE=12%, payout=40%. Sustainable growth?

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Question 388

A firm’s EV/EBIT = 14×. EBIT = 90M. Net debt = 250M. Equity value?

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Question 389

A firm’s P/CF = 12×. CFO = 150M. Shares = 100M. Price?

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Question 390

A firm’s EV/FCF = 16×. FCF = 50M. Net debt = 100M. Equity value?

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Free CFA Equity Practice Questions & Answers

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