Which of the following is not true about a sell side analyst? They would write a
ID: 2493502 • Letter: W
Question
Which of the following is not true about a sell side analyst?
They would write a Buy / Sell Hold opinion
They would create a forecast of a company's financial performance
They would try to generate trading opportunities for clients
They would purchase stocks for the firm's portfolio
All of the above
Which of the following would be true of using Beta for an economic analysis?
Beta provides a correlation to the economic sensitivity of a company to the market
Alpha is a better indicator than beta of economic sensitivity
A company with a low beta would be highly sensitive to changes in economic conditions
None of the above
Which of the following would improve the operating ROIC of a firm?
Pay a dividend
Reduce interest bearing debt
Buy back shares
All of the above
None of the above
Which of the following would increase the operating value of the firm?
Increase NOPLAT
Decrease excess cash
Buy back shares
Increase the reinvestment rate
None of the above
If a firm is expected to have a negative spread, which of the following actions would decrease the value of the firm?
Increase the payout rate
Increase the growth rate
Decrease the growth rate
Decrease the reinvestment rate
Which of the following is a driver of ROIC?
Cash tax rate
EBIT Margin
Invested Capital / Sales
All of the above
None of the above
Which of the following would decrease the CFI of a company?
Decrease excess cash
Sell a stake in a joint venture not controlled by the company
Increase the NOPLAT
All of the above
None of the above
Which of the following economic variables explain Total Return to Shareholders?
Change in P/E ratio
Margin change
Profit growth
All of the above
None of the above
Based on Mckinsey analysis, which of the following types of growth would lead to the highest potential for value creation?
Make a large acquisition
Create new markets through new products
Gain market share in a fast growing market
Gain share from rivals through incremental innovation
Gain share from rivals through product promotion and pricing
What is the time period that should be explicitly forecasted before creating a continuing value period?
Five years
Ten Years
Enough years for the firm to enter a mature state
None of the above
Which of the following is not true about a sell side analyst?
They would write a Buy / Sell Hold opinion
They would create a forecast of a company's financial performance
They would try to generate trading opportunities for clients
They would purchase stocks for the firm's portfolio
All of the above
Which of the following would be true of using Beta for an economic analysis?
Beta provides a correlation to the economic sensitivity of a company to the market
Alpha is a better indicator than beta of economic sensitivity
A company with a low beta would be highly sensitive to changes in economic conditions
None of the above
Which of the following would improve the operating ROIC of a firm?
Pay a dividend
Reduce interest bearing debt
Buy back shares
All of the above
None of the above
Which of the following would increase the operating value of the firm?
Increase NOPLAT
Decrease excess cash
Buy back shares
Increase the reinvestment rate
None of the above
If a firm is expected to have a negative spread, which of the following actions would decrease the value of the firm?
Increase the payout rate
Increase the growth rate
Decrease the growth rate
Decrease the reinvestment rate
Which of the following is a driver of ROIC?
Cash tax rate
EBIT Margin
Invested Capital / Sales
All of the above
None of the above
Which of the following would decrease the CFI of a company?
Decrease excess cash
Sell a stake in a joint venture not controlled by the company
Increase the NOPLAT
All of the above
None of the above
Which of the following economic variables explain Total Return to Shareholders?
Change in P/E ratio
Margin change
Profit growth
All of the above
None of the above
Based on Mckinsey analysis, which of the following types of growth would lead to the highest potential for value creation?
Make a large acquisition
Create new markets through new products
Gain market share in a fast growing market
Gain share from rivals through incremental innovation
Gain share from rivals through product promotion and pricing
What is the time period that should be explicitly forecasted before creating a continuing value period?
Five years
Ten Years
Enough years for the firm to enter a mature state
None of the above
They would write a Buy / Sell Hold opinion
They would create a forecast of a company's financial performance
Explanation / Answer
Ans 1: They would write a Buy / Sell Hold opinion Ans 2: Beta provides a correlation to the economic sensitivity of a company to the market Ans 3: Reduce interest bearing debt Ans4: Increase NOPLAT Ans6: Invested Capital / Sales Ans 7: None of the above
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