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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 31

Residual income is most sensitive to:

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Question 32

A firm with negative residual income is:

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Question 33

The present value of future residual income is added to:

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Question 34

A firm with high ROE but declining book value will have RI that:

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Question 35

Residual income is zero when:

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Question 36

The RI model is most similar in structure to:

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Question 37

A firm with ROE below required return but rising book value will have RI that:

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Question 38

The clean surplus relation excludes:

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Question 39

A firm with high ROE due to one‑time gains will have RI that is:

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Question 40

Residual income valuation is most appropriate when:

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Question 41

A firm with ROE far above required return will have:

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Question 42

The persistence factor in RI models measures:

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Question 43

A persistence factor close to zero implies:

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Question 44

A persistence factor close to one implies:

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Question 45

Residual income valuation is particularly useful for firms with:

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Question 46

Which statement best describes residual income (RI)?

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Question 47

A company has beginning equity of $200M and its shareholders require 10%. If net income is $30M, what is residual income?

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Question 48

Which assumption is required for clean surplus accounting?

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Question 49

A company has ROE of 18% and required return of 12%. Beginning book value is $50 per share. What is RI?

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Question 50

The residual income model values equity as:

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Question 51

A firm with ROE equal to its required return will have:

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Question 52

Which situation weakens the reliability of RI valuation?

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Question 53

If a firm’s ROE is consistently below its required return, its price-to-book ratio should be:

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Question 54

A persistence factor close to 1 implies:

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Question 55

A firm has beginning book value of $100, ROE of 20%, and required return of 10%. What is RI?

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Question 56

RI valuation is most similar to which other model?

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Question 57

A firm with high leverage will likely have:

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Question 58

Which is NOT an advantage of RI valuation?

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Question 59

The terminal value in RI models is usually based on:

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Question 60

A firm’s RI will increase if:

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Free CFA Equity Practice Questions & Answers

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Thank you