Fundamental determinant of asset value

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Reference no: EM133036879

Question 1: In Finance, the fundamental determinant of an asset's value is the future cash flow it is expected to generate.

  • true
  • false

Question 2: In Finance, the role of a manager is to:

  • Maximise shareholder value
  • maximise shareholder value 
  • maximise manager value 
  • maximise profit 

Question 3: What causes the value of a business to change over time?

  • Anything that might change the cash flow the business generates
  • General economic conditions
  • management style
  • inflation

Question 4: Important issues to consider when valuing a private company includes:

  • Whether key people stay at the company 
  • whether you are valuing for the controlling owners or minority shareholders
  • difficulties in valuing young, rapidly growing companies versus mature, established companies
  • all the above

Question 5: Maximising revenue should be the goal of the company.

  • true 
  • false 

Question 6: We can calculate the 'market capitalisation' of a company listed on the stock market by:

  • Finding out the value of the companies assets
  • multiplying the share price and the number of shares together.
  • adding together the companies liabilities and equities
  • adding the share price to the number of shares

Question 7: 'Market capitalisation' of a company listed on the stock market refers to:

  • nothing, this not a term we use in finance
  • the book value of the company 
  • the fundamental value of the company 
  • the market value of the company 

Question 8: A public company's share price(on the stock market) can be very different from the book value of their share. Why?

  • they are not different, price and value are the same things 
  • Share prices on the stock market go up and down, dependent on many factors including general market conditions.
  • Market value is determined by shareholders of a company, book value is determined by the manager of the company.
  • Share prices are only relevant when the market is going up

Question 9: When a share is overvalued, you should buy that share.

  • True 
  • False

Question 10: When valuing a company, analysts will consider:

  • Size of the expected cash flow
  • riskiness of cash flow
  • timing of cash flow
  • all the above

Reference no: EM133036879

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